Hydrocarbons cause a new round in a family feud
THE rancorous feud between India’s Ambani brothers, Mukesh and Anil, has reached a new low. Earlier this month one of Anil’s companies, Reliance Natural Resources, placed advertisements on the front pages of Indian newspapers, accusing the government of siding with his older brother over Mukesh’s attempts to raise the price of gas from a big field. The government’s actions could lead to “super normal profits” for Mukesh’s Reliance Industries, the ads claimed, and a 50% rise in power bills. Reliance Industries bit back, describing Anil’s media campaign as “malicious, mischievous, baseless and ill-informed”. For the government, the timing could hardly have been worse: this month, India kicked off a two-month marketing campaign for its biggest sale yet of exploration rights for oil and gas, scheduled for October. But the Ambanis’ eyes are firmly fixed on September 1st, when the Supreme Court takes up their dispute.
The row centres on the pricing of natural gas from one of India’s biggest fields, in the Krishna Godavari basin in the Bay of Bengal. In 2005 the brothers agreed that Reliance Industries, which controls the field, would sell gas from its D-6 lease (short for Dhirubhai-6, after the Ambanis’ late father) to Reliance Natural Resources for 17 years at $2.34 per million British thermal units. In 2007 the government stepped in, invoking its right under the lease to vet sales contracts, raising the price to $4.20. In June Bombay’s High Court upheld the terms of the original agreement. Reliance Industries, which promptly appealed against the judgment in the Supreme Court, argues that it cannot produce the gas at the lower price because of increased costs. The oil minister, Murli Deora, meanwhile, has said that the gas belongs to neither brother but to India. …
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