The Petroleum and Natural Gas Ministry has sought a legal opinion on the issue of whether Reliance Industries Limited's (RIL's) partners – BP and Niko Resources of Canada – could be given the new gas price effective from April 1 as they are not part of the ongoing arbitration proceedings between RIL and government.

Officials in the Petroleum Ministry said the Ministry had approached the Law Ministry seeking a view on not only how to go about the gas price hike issue for the two entities along with RIL but also on the exact calculation of the bank guarantee to be sought from RIL for the purported shortfall in gas production in the KG basin till it is independently verified that the drop in production is due to geological reasons and not done deliberately.

In a statement here, BP said that it along with RIL and Niko were contractors and producers of gas from the D1 and D3 fields under the KG-D6 block Production Sharing contract (PSC). ``BP, RIL and Niko are working closely with the Government to implement the gas pricing guidelines 2014 in accordance with this decision of the Government. According to the recently notified India Domestic Gas Pricing Guideline 2014, the pricing formula applies for all gas produced in India effective April 1, 2014. As to the D1 and D3 gas discoveries, these guidelines become applicable subject to the submission of a bank guarantee in a manner to be notified separately,'' the statement added.

However, it is learnt that the view within the Petroleum Ministry is that Cabinet had given its nod for gas price hike for RIL subject to furnishing of bank guarantee and both BP and Niko Resources will have to join the arbitration proceedings to stake their claim for the new gas price. ``We have already conveyed this to the two partners and told them that they have no alternative but to join the arbitration proceedings and we are eagerly awaiting the legal opinion before proceeding further on this issue. We are also awaiting a word on bank guarantee issue and how it has to be calculated,'' the official added.

RIL had dragged the ministry to arbitration in 2012, saying the contract does not provide for levy of a $1.8 billion penalty for output not being in line with projected production profile.

More In: Industry | Business