* To sell at $4.2/mmBtu until new govt takes over -source
* Output from D6 at about 13 mmscmd-govt source
By Nidhi Verma
NEW DELHI, March 28 (Reuters) - Reliance Industries
and its partners should continue to sell gas at
current prices from its east coast block following a delay to a
new pricing regime ordered by India's election authority, a
government source said on Friday.
Reliance's five-year gas sales pacts with sectors including
fertiliser makers and power will expire on March 31, requiring
buyers to sign new contracts for supplies from its D6 block in
the Krishna Godavari basin.
"$4.2 (per million British thermal unit or mmBtu) will
continue to be in force until the Code of Conduct is lifted,"
said the source, referring to rules restricting policy shifts
before elections. India goes to the polls on April 7.
The oil ministry informed the upstream regulator - the
Directorate General of Hydrocarbons (DGH) - of the pricing
decision after it was cleared by Oil Minister Veerappa Moily on
"The DGH will have to now inform the companies concerned,"
said the source, who requested anonymity due to the sensitivity
of the matter.
Both Reliance and the upstream regulator declined immediate
The Election Commission asked the government to defer an
increase in gas prices until the completion of the five-week
general election in the middle of May.
The cabinet last year approved a formula, linking prices of
locally produced gas with global benchmarks, that could have
nearly doubled gas prices from the current $4.20 per mmBtu.
India's main opposition party Bharatiya Janata Party (BJP),
which surveys show is on course to become the largest
parliamentary party, has said it would review the gas pricing
formula if elected.
Demand for gas in India far outstrips domestic supply, but
the government has kept prices below global market levels for
producers of fertiliser and electricity, deterring investment in
domestic exploration and production.
India, the world's fourth-largest energy consumer, has few
energy resources other than coal, which meets 56 percent of its
Gas output from the D6 block has fallen sharply since 2010.
Reliance says the decline is due to the geological complexity of
the block while the government believes contractors have failed
to drill the promised number of wells.
The block, in which BP has a 30-percent stake and
Canada's Niko Resources owns 10 percent, currently
produces about 13 million cubic metres of gas per day, the
A fertiliser industry source said industry buyers would sign
an agreement with Reliance at $4.2 per mmBtu, once minor details
regarding marketing margins and credit terms are resolved.
(Reporting by Nidhi Verma; editing by Douglas Busvine and Jason