Reliance Industries’ consortium partner Niko Resources of Canada has extended by over three months its search for a buyer of its stake in RIL’s eastern offshore KG-D6 gas block to pay off debt.
“The Board of Directors of Niko now believes that it requires more time to determine if the sales process will be successful or, if not, to develop an alternative plan with the assistance of its advisors and stakeholders to achieve the best results for the stakeholders of the company,” Niko has said in a filing to the Toronto Stock Exchange.
It said it has now reached reached an understanding with lenders to extend the search till September 15.
Niko had in February announced it intended to sell-off its 10 percent stake in the KG-D6 block to square a $340 million debt. The company had earlier planned to sell off the interest by April 30 but later extended it till May 31.
The company has earlier blamed a lower-than-expected gas price announced by the Indian government for its decision to sell its stake in the KG-D6 block.
The government had in October announced a new natural gas price of $5.61 per million British thermal unit, raising it from $4.2.
“The announced price for the period from November 2014 to March 2015 is a 33 percent increase over the price received previously, but is lower than expected. In addition, there is uncertainty around the long-term natural gas price outlook in India,” Kevin J. Clarke, chairman Niko Resources had said.
In April, Niko had said that RIL’s gas discovery MJ-1 may hold 1.4 trillion cubic feet of gas resources, roughly half of the reserves in the KG-D6 block’s main gas fields.
Reliance on Friday sought an early revision of gas prices and urged the government to quickly resolve what it termed as “legacy issues” over its production-sharing contracts for discovered hydrocarbons.
Announcing the new gas price October last, the government had said the premium to RIL for its gas discoveries being under arbitration, the company would continue be paid the earlier price of $4.2 per unit.
The arbitration concerns the penalty imposed on the company for allegedly failing to meet output targets from the Reliance-led consortium’s specific offshore blocks. The government wanted the company to make good this shortfall vis-a-vis the terms of the contract.
Petroleum Minister Dharmendra Pradhan had told parliament last year that a fresh notice had been served on Reliance Industries seeking additional penalty for lower production of gas.
The government had said that a premium would be given for all new discoveries in ultra-deep-water areas, deep-water areas and the high pressure-high-temperature areas, but did not spell out further details on how it will be calculated and when it will be awarded.
While shallow-water blocks are at a depth of up to 100-500 metres, deep-water blocks descend to around 1,000 metres. Those at depths beyond 1,500 metres are classified as ultra-deep-water blocks.
These are the areas where the RIL has maximum discoveries. (IANS)