New Delhi, February 24
Oil Minister M Veerappa Moily has told Prime Minister Manmohan Singh that Reliance Industries' contract for KG-D6 gas fields cannot be terminated pending arbitration on issue of output lagging targets.

Moily, in a 13-page letter to the Prime Minister, explained the process, the contractual requirement and the steps followed for raising natural gas prices from April 1, without which several gas fields of both private sector firm RIL and state-owned ONGC would find production economically non-viable.

Rebutting allegations by the AAP and its leader Arvind Kejriwal that the price increase was done to benefit RIL, Moily on February 14 wrote to Manmohan Singh saying ONGC's average cost of producing natural gas was about $3.6 per million British thermal unit in 2012-13 and its newer finds in deep-sea cost more than the current rate of $4.2.

On gas production from RIL's eastern offshore KG-D6 gas fields lagging targets since 2010-11, Moily told Manmohan Singh about the process initiated by his predecessor S Jaipal Reddy of penalising the firm by disallowing a portion of cost incurred. — PTI