Niko Resources Ltd., a Canadian listed international oil and gas exploration and production company, provided Monday an update on the KG D6 block located off the east coast of India.
Notice of Arbitration
Reliance Industries Ltd. (RIL), BP and Niko, the contractor group of the D6 block in India, have issued a notice of arbitration May 9 to the Government of India seeking the implementation of the “Domestic Natural Gas Pricing Guideline 2014” notified on Jan. 10.
The continuing delay on part of the Government of India in notifying the price in accordance with the approved formula for the gas to be sold has left the parties with no other option but to pursue this course of action. Without this clarity, the parties are unable to sanction planned investments of close to $4 billion this year. In addition, this will also delay the ability of the parties to appraise and develop other significant discoveries made last year. Overall, the parties were planning to invest $8-10 billion in the next few years to significantly increase production from the D6 block. This domestic production is essential for meeting India’s energy needs and will also help conserve foreign exchange which is required for imports of natural gas into India at the present time. All of this requires clarity on pricing.
The three parties shall endeavor to work with the Government to achieve a prompt and efficient resolution of this dispute.
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