Niko to Exit India's KG D6 Block on Low Domestic Gas Pricing

Niko Resources has decided to sell its stake in India’s offshore KG D6 block.

The company said that the recent hike in gas prices in India is lower than expected and there is uncertainty over long-term price outlook in the country.

“In October 2014, the Government of India announced its new domestic gas pricing policy, effective November 1, 2014. The announced price for the period from November 2014 to March 2015 is a 33 percent increase over the price received previously, but is lower than expected. In addition, there is uncertainty around the long-term natural gas price outlook in India,” said Kevin J. Clarke, Chairman and interim Chief Executive Officer, Niko Resources Ltd. in the third quarter result report.

Niko holds 10 per cent stake in the KG-D6 block.

In October, the Indian government increased natural gas price to $5.61 per million British thermal unit from $4.2. The increase was lower than $8.4 that the industry was expecting.

Announcing financial results for quarter ended December 31, 2014, Clark said the company has engaged Jefferies as its financial advisor to look for a buyer for KG-D6 stake.

“Marketing efforts are underway for the potential sale of the company’s interest in the D6 Block in India along with other assets of the company and/or the entire company,” he said.

Reliance Industries Limited (RIL) is the operator of the block with 60 per cent interest while the remaining 30 per cent is with BP. The partners have first right of refusal.