HC restrains RIL from selling gas

The Bombay High Court has restrained Reliance Industries Ltd, India's largest non-state company, from selling gas from its field off the country's east coast to any company other than Reliance Natural Resources.

Reliance Industries plans to appeal, the company said in an e-mailed statement today. Reliance is slated to start producing gas from the field in Krishna Godavari basin in June 2008. The restriction on Reliance Industries may benefit Reliance Energy Ltd., which plans to build the world's largest gas-fired power plant in the northern Indian state of Uttar Pradesh.

Reliance Industries is controlled by Mukesh Ambani who agreed to settle a feud over ownership of the family business by keeping the main oil and chemical business. His brother Anil got the power, cell-phone and financial services companies.

India's Oil Ministry in July asked Reliance Industries to increase the price of the gas it plans to sell to Reliance Natural. Selling gas at prices lower than what other private oil companies charge in India would reduce the royalty that the government will earn, a statement issued by the Oil Ministry, which is party to the production contract, said July 26. Reliance Natural negotiates fuel supply contracts for the Anil Dhirubhai Ambani group, which includes Reliance Energy. In 2002, Reliance discovered 14 trillion cubic feet, or 392 billion cubic meters, of gas in the Krishna Godavari area off the coast of Andhra Pradesh state. Reliance may produce gas from the area in 2008, P M S. Prasad, president and chief executive officer of Reliance Industries, said on May 27, 2005.