Canada’s Niko Resources, Reliance Industries’s partner in KG-D6 has put on sale its 10% stake in the gas block off the east coast indicating that it may not be a party to the arbitration move against the $1.5-billion penalty claim.
Canada’s Niko Resources, Reliance Industries’s partner in KG-D6 has put on sale its 10% stake in the gas block off the east coast indicating that it may not be a party to the arbitration move against the $1.5-billion penalty claim.
Niko’s interim chief executive Robert Ellsworth said the company had re-launched the sales process for its interest in the D6 Block following “favourable developments with respect to natural gas pricing applicable to the company’s undeveloped deep water fields”.
RIL is the operator of KG-D6 block with a 60% interest, while BP plc of UK owns 30% stake.
Apart from its stake in the D6 Block in India, it part owns Block 9 in Bangladesh.
“As previously communicated to shareholders, the company is in the midst of a strategic plan to enhance the value of our core assets with the objective of ultimately monetising these assets for the benefit of the company’s stakeholders,” he said in the earnings statement for the quarter ended September 30.
It announced plans of selling its stake in the basin, but later shelved them.
Financially strained Niko had in February last year announced plans to sell its 10% stake in the KG-DWN- 98/3 or KG-D6 block to pay off $340 million debt.
It had planned to sell off the interest by April 30, 2015 but later extended it to May 31 and then to September 15, 2015. It allegedly called the sale off because it could not find a buyer.
Ellsworth said Niko believes the KG-D6 block offers “a number of compelling attributes to potential bidders” but the sale “will inevitably be complicated” by the $1.55 billion claim made by the government against the three firms in respect of gas reckoned to have migrated from neighbouring blocks of ONGC into D6.
“The sales process will inevitably be complicated by the recent claim made by the government of India against the contractor group of the D6 production sharing contract in respect of gas said to have migrated from neighbouring blocks to the D6 Block,” he said.
THE HURDLE
Justice A P Shah Committee had said RIL should pay the government for the natural gas it has drawn from an adjacent block of ONGC. Niko believes as a contractor they are not liable to pay penalty claimed
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