Niko Says Will Hold Back Investments in India's KG D6 Gas Block

Partners in KG D6 block would collectively defer their investment plans due to lack of clarity over gas price revision in India, Niko Resources said in its annual report.

“If the expected new price for natural gas sales from the D6 block in India is not notified by the government, then a significant portion of the contractor group’s planned investments in the block are expected to be deferred,” Financial Express newspaper quotes from Niko’s annual statement.

Last week, Indian government postponed the planned hike in natural gas prices by three months to September-end. This was the second postponement. The new price regime which was supposed to come in effect on April 1 was earlier deferred till after the elections.

The previous government had approved pricing formula suggested by a panel headed by C Rangarajan. The price of gas, according to this formula, comes to around $8.3 per million British thermal unit, almost double the current price of $4.2. The new price was notified in January.

Niko, which holds a 10% stake Reliance Industries operated KG-D6 block, said that the plan for R-cluster development project in the D6 block was approved by the government, providing the opportunity for significant production growth for the company in the future, adds Financial Express.

It, however, added: “The final decision to proceed with the project is pending resolution of the gas pricing issue.”