RIL partner Niko to take $2-mn per quarter hit over new gas price

Niko Resources Ltd, a partner of Reliance Industries in the eastern offshore Krishna-Godavari D6 block, said its cash flow will be reduced by $2 million per quarter from October 2015 to March 2016.

This is because the union government has cut domestic natural gas prices by 18 per cent to $4.24 per million British thermal units (mmBtu) on a net calorific value basis for that period.

The reduction is expected to negatively impact net cash flow by approximately $2 million per quarter for the next two quarters, Niko Resources said in a statement on Friday.

Besides, there has been a natural production decline in the producing D-1 and D-3 fields in the KG-D6 block, the company said, adding that the total sales volume from the block has fallen to 41 million cubic feet a day in the second quarter of this fiscal, from 47 million cubic feet a day in the same quarter last year.

In September, the Centre announced a price of $3.82/mmBtu on gross calorific value for the October 2015 to March 2016 period, which represents a reduction of approximately 18 per cent from the price for natural gas sales for the April-September 2015 period.

For D-1 and D-3 in the D6 Block, where a dispute between the contractor group and the Centre on the cost recovery of certain costs is under arbitration, the contractor group would be paid the earlier price of $4.20/mmBtu.

The difference between the revised price and the earlier price would be credited to a gas pool account.

Whether the amount so collected is payable or not to the contractors of this block would depend on the outcome of the award of the pending arbitration and any attendant legal proceedings.