Reliance, BP Withdraw Gas Price Arbitration

Reliance Industries and BP have withdrawn their joint gas price arbitration referral against the Indian government.

“Yes. The gas price arbitration has already been withdrawn,” a spokesperson from BP told NGW via email.

This comes within days of announcement that RIL and BP would invest $6bn in KG basin offshore India’s east coast.

With withdrawal of the arbitration referral, RIL and BP can now hope to get the current price of natural gas from new production in the deepwater KG basin. For the period April 1 to September 30, the gas price for deepwater and difficult discoveries is $5.56/mnBtu while domestically produced gas is priced at $2.50/mnBtu. During the arbitration dispute, RIL and BP had been denied the higher price.

However, in addition to price arbitration, there are three more arbitration cases ongoing involving both parties and their partner Niko, all against the Indian government. These include one on cost recovery, another on a gas migration penalty, and one about a penalty for unfinished minimum work programme.

Shardul Sharma