New Delhi: Oil minister M. Veerappa Moily on Friday said a majority of the concerns around Reliance Industries Ltd’s (RIL) gas field in the Krishna-Godavari (KG) basin had been resolved, and only “one concern" remained.

The concern relates to the petroleum ministry’s plan to move a cabinet note seeking to bar RIL from charging a higher price for its gas while compensating customers for the shortfall in supply from its field, until it can be ascertained that the deficit was the result of geological reasons.

“We are taking it to the CCEA (Cabinet Committee on Economic Affairs), we are taking it forward. The proposal is being finalized. In a week or so it will go to the Cabinet," Moily said.

This comes in the backdrop of a visit to New Delhi by a delegation led by Bob Dudley, group chief executive of BP Plc. While RIL holds a 60% stake in the KG basin block, BP holds 30% and Canada’s Niko Resources Ltd 10%.

While a RIL spokesperson declined to comment, Dudley in an emailed statement said, “Today I have met senior leaders in the Government of India at New Delhi and discussed opportunities and challenges in the Indian energy sector at large and also specific to our deep water exploration and development projects. We are committed to working together with the Government of India in their quest for energy security." In response to a question about such regulatory issues affecting investors confidence, Moily said, “It is not a one-time issue, it is a process issue." He added, “If issues can be resolved, it will be resolved. We are here to honour the contract and the production sharing agreement and they have to honour theirs. No rules will be flouted. The CCEA will take the decision. There is a legal contract." The contract concerns RIL’s D1 and D3 discoveries in the KG basin that are part of the D6 field. The government in June agreed to increase the price at which gas will be sold to producers of power, fertilizers, minerals and steel, benefiting gas producers including RIL and state-run Oil and Natural Gas Corp. Ltd. The price increase will be effective from 1 April 2014. But production from these fields has been far below estimates, hurting customers to whom RIL had committed supplies. RIL had agreed to supply the gas at $4.2 per million British thermal units (mmBtu). The new price is expected to be around $6.83 per mmBtu.

Moily said by 2016-17, gas production from the KG block is expected to double. BP and RIL plan to invest $8-10 billion by 2016-17 in further development of the D6 gas block, Moily said.

In a separate development, Moily joined a chorus of voices against the Central Bureau of Investigation (CBI) filing a First Information Report (FIR) against Kumar Mangalam Birla, chairman of the Aditya Birla Group, in the case related to irregularities in coal block allocations. “Time has come to ensure that whatever we do is in accordance with the rule of law. Mere perception can’t be the issue. India can’t become Russia, where investors don’t go and billionaires are put behind bars," Moily told reporters. He was referring to Russian oligarchs such as Mikhail Khodorkovsky being charged by the government.

Prime Minister Manmohan Singh too has come under fire in the case. Former coal secretary P.C. Parakh, who, too, has been named in an FIR by the CBI in the case, said that while he believes he did nothing wrong, if the CBI wants to look into the issue, then, apart from Birla and him, the agency also needs to involve others who were part of the decision-making in allocating coal mines. “It is not only the government’s responsibility but also the responsibility of the judiciary and agencies such as CBI. We are not like (Mughal emperor) Aurangzeb; there has to be rule of law," Moily said.

India’s corporate sector and several cabinet ministers, including commerce minister Anand Sharma, have spoken out against the CBI’s move, saying it would spook investors confidence just as India tries to revive investments.

Birla met finance minister P. Chidambaram and revenue secretary Sumit Bose in New Delhi on Friday. In his first public remarks after the filing of the FIR, he told reporters: “As of now, I am not worried about it. There is nothing wrong (that) has been done, so why should one worry."

“I obviously brought this up with FM...So many other things to talk about...work goes on. We are in so many other industries. There are so many other things to discuss with him," PTI quoted him as saying.

Speaking about India’s energy security initiatives, Moily said that after 2008, on foreign acquisitions there was a dull period of three years in the wake of the Imperial crisis.

ONGC Videsh Ltd’s (OVL) $2.1 billion acquisition of a stake in Imperial Energy Corp. Plc.’s Siberian deposits is not yielding results as per the initial projections.

The Comptroller and Auditor General of India has faulted the acquisition.

“In the last one year, we have achieved several landmarks. We will go before China can go into these nations," Moily said. India recently trumped China in acquiring a stake in a deep offshore block in Brazil. India has been ramping up its overseas portfolio. The development in Brazil comes in the backdrop of recent stake acquisitions in Mozambique’s Rovuma 1 offshore block, said to be the largest gas discovery off Africa’s east coast, with estimated recoverable reserves of 35-65 trillion cu. ft (tcf). Moily also spoke about 39 new domestic discoveries and the 10th New Exploration Licensing Policy (Nelp) round to be operationalized in the current fiscal year.

He added that the Kirit Parikh report on diesel pricing and the Vijay Kelkar report on reducing India’s dependence on overseas energy by 2030 will be finalized shortly.

Moily said OVL, the overseas arm of ONGC, and Oil India Ltd (OIL) have won two shallow water oil and gas blocks in Bangladesh. The 50:50 joint venture of OVL and OIL “has been awarded shallow water blocks SS-4 and SS09 in Bangladesh," he said.

The production sharing contract for the two blocks was initiated in September and formal signing will happen sometime this month, he said.

PTI and Reuters contributed to this story.

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