Government tells RIL to avoid arbitration in D6 gas cost recovery

In what appears to be an attempt to browbeat Reliance Industries Ltd into withdrawing its arbitration notice to the government over its move to scale down the cost recovery sought by RIL for its development of the Krishna-Godavari D6 gas block, the ministry of petroleum and natural gas has asked the Mukesh Ambani-run company to immediately withdraw the notice, calling it ''arbitrary'' and premature.

Director of the exploration division of the ministry Partha Sarthi Das has signed the letter to RIL executive director P M S Prasad saying, ''As on date, no dispute has arisen to warrant arbitration and the company should withdraw the notice invoking arbitration forthwith.''

Reliance had issued the arbitration notice on 24 November 2011 to counter the petroleum ministry's well-publicised moves to restrict the development costs that the company is seeking to recover in the gas block before sharing the sales profit with the government.

In reply, the ministry has stated that the claims made by RIL ''are based on surmises, conjecture and apprehensions''.

''As of date, there is no cause of action for the claimant to raise a dispute entitling the claimant to refer it for arbitration,'' it says.

The petroleum ministry had acted on the advice of its technical arm, the directorate general of hydrocarbons (DGH).