THE AMBANIS RIVALRY PART 2

2009

The current ongoing bone of contention is the supply of gas from the k g basin by mukesh's RIL to anil's led reliance natural resouces. The battle has taken a new turn with petroleum industry also coming in between.

BONE OF CONTENTION

In 2005 , when the agreement was reached between the brothers there was a clause , which used to saying that mukesh has to supply " 28 million cubic meters of gas per day to his brother's company Reliance Natural Resources Ltd (RNRL) at 2.34 dollars per million British thermal unit (mBtu) for 17 years". now after 4 years the goverment fixed price is 4.21$ per mBtu.

Mukesh is saying that he will only sell gas to anil after the goverment nod , as goverment is sole responsible in establishing price of gas. Anil is claiming it to be preposterous , claming that mukesh R energy have enough gas left with him after providing to goverment own plants that it can sell it whatever cost he chooses

Though the matter had been put before the mumbai high court , which told mukesh to respect family clause

THE GOVERMENT ANGLE

The petroleum ministry is saying that natural resoures are goverment and people's property , therefore it is not for brothers to decide about price,it is demanding the supreme court to quash the family pact.Energy analysts worry the fight over the gas price could cast a shadow over the next round of the government’s “new exploration licensing policy”. Oil companies are allotted exploration blocks under the condition they are allowed to exploit any discoveries at market prices.

IMPORTANT FACT "Assuming 80 mn cubic meters per day of gas supplies for a year as a whole, India could save $ 8.3 bn annually," Moran Stanley said in a research note on RIL for its clients. RIL, which is currently producing 31-32 mmcmd, is likely to touch 80 mmcmd in next six months. This peak output could replace close to 26 million tons of crude oil, which is as much as ONGC produces domestically, or about 17 per cent of current demand in India, the report said. "We estimate 20 mmcmd of gas would go to the fertilizer industry and most of the rest to the power industry. This implies that as much as 13 million tons or 50 per cent of the country's fertilizer production, and about 12,500 MW of power, or 8-9 per cent of overall power produced in the country, can run on RIL's gas." RIL stated gas production from KG-D6 fields on April 2 and has signed contracts with 15 fertilizer plants to sell close to 15 mmcmd gas. Additionally, it has contracted over 25 mmcmd to 19 power plants and 3.3 mmcmd to steel plants. Morgan Stanley report stated that 5 mmcmd more gas could go to fertilizer plants and identified power plants that can take more of KG-D6 gas.