RIL and RNRL started informal meeting over hammering out new gas supply agreement

After three years of legal struggle, the Ambani brothers restarted their negotiation over gas supply from Krishna-Godavari basin’s D6 block.

On May 18, 2010, Mukesh Ambani led RIL and Anil Ambani led RNRL started informal talks over hammering out a new gas supply agreement.

A reliable source said, "Two top officials of RIL and Anil Dhirubhai Ambani Group on Tuesday held preliminary discussions on a possible settlement of the gas dispute,"

Neither RIL, nor RNRL disclosed any information about the meeting.

On May 7, 2010, the Supreme Court announced that the family MoU, under which RIL was supposed to supply gas to RNRL’s Dadri Power plant in UP for 17 years, is not legally binding.

The family MoU created in 2005, says that RIL would supply RNRL gas from K-G D6 block at a price of $2.3 per mmbtu which was lower than government fixed price of $4.2 per mmbtu.

The court ordered that the gas should be allocated as per government rules and the Supreme Court gave a period of six weeks to renegotiate the deal.

The gas provided by RIL will be used to run RNRL’s 10,000 MW powerplant in Dadri UP.

The Supreme Court announced that RNRL would get gas in future according to the price fixed by the government. Any new agreement between RIL and RNRL must be in line with the Production Sharing Contract (PSC) and follow government policy.

RNRL share prices went up over gas dispute verdict news

In a week, Supreme Court will give its verdict about the RIL vs RNRL gas dispute. With this news, share prices of Reliance Natural Resources (RNRL) went up. KG Balakrishnan, the Chief Justice who is overlooking this case is going to retire on May 11, 2010.

At 10:35 a.m. share prices of RNRL was at Rs.66.70 which advanced 7.06% to Rs.67.85 and Rs.61.50 low. On the other hand, share of Reliance Industries Limited (RIL) went down by 2.26% after the company released its quarterly results. Indiaserver.com reports:

RIL and RNRL have been fighting over the gas supply to RNRL from Krishna-Godavari basin gas fields of about 28 million units of gas at the cost per unit of $2.34 which belong to RIL as per the New Exploration or Licensing Policy (NELP).

Mukesh D. Ambani led Reliance Industries Limited is the largest private sector conglomerate with an annual turnover of $44.6 billion and profit of $3.6 billion as of March 2010. It was founded by Dhirubhai Ambani in 1966. Oil business is the core business of RIL. After the death of Dhirubhai Ambani the company was divided between Dhirubhai Ambani’s two sons- Anil Dhirubhai Ambani and Mukesh D. Ambani.

Reliance Natural Resources Limited was incorporated on March 24, 2000, under the Companies Act, 1956as Reliance Platform Communications.Com Private Limited. The status of the company changed from private limited to public limited on July 25, 2005. The company’s name has been changed to its present name under Fresh Certificate of Incorporation.