InvestorQ : What is the likely loss or penalty that Reliance Industries will have to incur on the KG-D6 basin for lower gas output?
Dia Deshpande made post

What is the likely loss or penalty that Reliance Industries will have to incur on the KG-D6 basin for lower gas output?

Answer
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Ria Jain answered.
4 months ago


According to estimates put out by Reliance, the total liability in the KG-D6 cost recovery dispute should not exceed $400 million. The dispute has a 10 year history and pertains to under-utilization of its gas capacity in the KG-D6 basin. Gas production by Reliance started to lag projections from 2010 onwards. Due to this production shortfall, the government disallowed $3 billion worth of costs. This led to Reliance dragging the government to court and was reason for this dispute. RIL’s contention is that the Production Sharing Contract allows extractors to recover all costs before sharing revenues with the government. The case is slated for hearing only in late 2021. But if the overall liability is only $400 million, then it should let the Saudi Aramco deal to go through without hiccups.