Reliance Industries Ltd [Get Quote], whose gas pricing formula has been questioned by Anil Dhirubhai Ambani Group company Reliance Natural Resources Ltd [Get Quote], has said that the company has not breached a Bombay high court order barring any involvement of 'third-party interest" in the K-G basin gas.

"We have in no way created any third-party interest in the K-G basin gas as no contract has been signed with any company regarding the price or volume of the gas," a RIL spokesperson said, adding that the bids for the K-G basin gas are for the volume of gas that is not contracted with RNRL.

RNRL has written to the petroleum ministry asking it not to approve RIL's formula for pricing of gas from its block in the Krishna-Godavari basin. Moreover, it tells the oil ministry that RIL has breached the court order which asks it not to involve any third party in the gas sale for the contracted amount of gas.

The Bombay High Court had on May 3, in an interim order, asked RIL not to "create third party interest" for the disputed volume of 40 mscmd (million standard cubic metres per day) of gas from the K-G basin.

RNRL has an agreement with RIL for supply of 28 mscmd of gas. RIL has another agreement with NTPC for sale of 12 mscmd of gas from the area, which is also sub-judice.

If NTPC does not take that volume of gas, the gas is contracted to go to RNRL.

The petroleum ministry, on its part, is miffed at being drawn into the gas sale dispute between Reliance Natural Resources Ltd, an Anil Dhirubhai Ambani Group company, and Mukesh Ambani's Reliance Industries Ltd.

"We are not run by individuals and will not reply to them. Only if a court directs us or issues instructions, will we respond," said a petroleum ministry official.

The Mukesh Ambani-promoted company is planning to start with a production of 40 mscmd in June 2008, which will be increased up to 80 mscmd by mid-2009.Even if 40 mmscmd gas was locked by the court's order, RIL has a right to sell the rest, for which it is in the process of discovering the price, the spokesperson said.

The government had early last year prevented RIL from selling 28 mmscmd of the K-G basin gas to RNRL at $2.34 per million British thermal unit (mBtu) citing lack of price discovery and non-adherence to arm's length pricing that is required under the production sharing contract.

"The price discovery exercise by RIL does not amount to a contract that the company has entered into. Before the law, as long as RIL does not enter into a contract for the gas with any company before the final hearing of the matter in July, RIL has not breached the court order," said a senior advocate in the Bombay High Court, who is closely associated with the case.

Meanwhile, an ADAG spokesperson maintains RIL has breached the interim order of the Bombay High Court by calling for bids for the gas. "Our lawyers have sent a written statement to the petroleum ministry alerting it on the RIL exercise," the spokesperson said.