Aam Admi Party leader and activist lawyer Prashant Bhushan has sought the Supreme Court’s urgent intervention to stop the increase in natural gas prices, saying that the new rates would enrich Reliance Industries and hurt the people of the country, on whose behalf the state is a trustee of natural resources, as ruled earlier by the top judicial authority.
Bhushan, representing NGO Common Cause, said the government’s decision should be stayed at least for a few months so that the new regime after the elections, which will bear the consequences of higher gas prices, can look at the matter afresh. Bhushan had earlier filed a petition challenging higher gas rates. It was listed for March 4 but it could not be taken up. The NGO said RIL had written to the directorate general of hydrocarbons on May 22, 2009 giving its cost calculations which show that the cost of production is less than $1 per mmbtu. It had also offered natural gas to NTPC and the Anil Ambani group for $2.34 per unit for 17 years.
“Evidently, the demand for an increase in gas price was motivated by RIL’s greed and not by any cost considerations,” it said. The government and the oil industry have argued that no company would explore India’s deep-water regions if they are not allowed market-linked prices. This would only encourage the import of LNG that costs double the new domestic price, they say.
RIL, its partner BP that holds 30% in Reliance-operated blocks, and ONGC have argued that many fields will be unviable at the current price. Some ONGC fields would be viable only at $11.
The petition argues that if this is the case, then only new fields should charge the new price. “The nation can always pay a higher price for more difficult horizons,” the petition says.
“Reliance Industries has argued in its affidavit that since it produces only 15% of the country’s gas, it cannot be said to be the major beneficiary of the price increase.
This argument is not acceptable since this 15% share is due to deliberate underproduction by RIL in violation of its field development plans and undertakings. Also, the KG basin is capable of producing much more if the PSC with RIL is cancelled and the entire field is put to auction. Reliance says gas output fell because of geological reasons and has initiated arbitration against the government’s decision to penalise it for the fall in output RIL and BP say that initial estimates of output are not binding commitments and the actual production has turned out to be different in many fields across the world.
Bhushan, representing NGO Common Cause, said the government’s decision should be stayed at least for a few months so that the new regime after the elections, which will bear the consequences of higher gas prices, can look at the matter afresh. Bhushan had earlier filed a petition challenging higher gas rates. It was listed for March 4 but it could not be taken up. The NGO said RIL had written to the directorate general of hydrocarbons on May 22, 2009 giving its cost calculations which show that the cost of production is less than $1 per mmbtu. It had also offered natural gas to NTPC and the Anil Ambani group for $2.34 per unit for 17 years.
“Evidently, the demand for an increase in gas price was motivated by RIL’s greed and not by any cost considerations,” it said. The government and the oil industry have argued that no company would explore India’s deep-water regions if they are not allowed market-linked prices. This would only encourage the import of LNG that costs double the new domestic price, they say.
RIL, its partner BP that holds 30% in Reliance-operated blocks, and ONGC have argued that many fields will be unviable at the current price. Some ONGC fields would be viable only at $11.
The petition argues that if this is the case, then only new fields should charge the new price. “The nation can always pay a higher price for more difficult horizons,” the petition says.
“Reliance Industries has argued in its affidavit that since it produces only 15% of the country’s gas, it cannot be said to be the major beneficiary of the price increase.
This argument is not acceptable since this 15% share is due to deliberate underproduction by RIL in violation of its field development plans and undertakings. Also, the KG basin is capable of producing much more if the PSC with RIL is cancelled and the entire field is put to auction. Reliance says gas output fell because of geological reasons and has initiated arbitration against the government’s decision to penalise it for the fall in output RIL and BP say that initial estimates of output are not binding commitments and the actual production has turned out to be different in many fields across the world.
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