Niko too can up stake by 30%: Mukesh camp

MUMBAI: Trying to clear off any misunderstanding between Canadian oil and gas company Niko Resources ltd (Niko), its existing partner in main Krishna Godavari (KG) D6 block and the NEC-25 block in the Mahanadi basin, Reliance Industries Ltd (RIL) on Tuesday said Niko was well informed about the partnership with British Petroleum (BP).

Mukesh Ambani, on Monday, singed one of the biggest foreign direct investment deal (FDI) with global oil and gas major BP to sell 30 per cent state in its 23 oil and gas blocks for a total consideration of $9 billion.

According to a RIL spokesperson, as per the contractual provision, Niko can increase by 30 per cent of their current holdings.

“Niko currently holds 10 per cent in KG D6 and NEC 25, and they can increase their holding to 13 per cent, ie. 10 per cent plus 30 percent of 10 per cent. In MN D4, they currently hold 15 per cent and they can increase it to 19.5 per cent, ie. 15 per cent plus 30 per cent of 15 per cent.”

Apparently a few days ago, Niko had said that it was not aware of its partner’s plans for the flagship gas-producing block.

Niko’ CFO Murray Hesje had quoted in a Canadian newspaper that he did not know what was causing the delay in the budgeting process at RIL.

 A few days latter Niko posted a release on its site saying that it has now received the operator’s volume forecast for the fiscal ended March 31, 2012, which predicted that volumes during the period will remain flat at current production levels.

According to experts in the oil and gas sector, Niko’s concerns can be attributed to current declining gas production volume at D6 block since it went in production on 1 April, 2009.

 Though gas production had touched a peak of 60 mcmd last year, it has started declining in the past months.