Deora explains Oil Ministry's stand on gas row to PM

Deora met Prime Minister for about half an hour and is believed to have explained in detail the part of the demerger agreement - which split the Dhirubhai Ambani empire between brothers Mukesh and Anil - that sought to appropriate the gas found in Reliance Industries' KG-D6 and other fields between the firms run by them.

Sources in know of the development said the minister, who has been under fire from the Anil Ambani camp for allegedly siding with the elder brother on the issue, explained how such agreements were in violation of the Production Sharing Contract and would set a wrong precedent for others.

Deora, they said, told Singh that his ministry had to move a Special Leave Petition in the Supreme Court as the Bombay High Court had given effect to the family MoU and given the private agreement precedence over government's right to formulate Gas Utilisation Policy under the PSC.

The Bombay High Court had on June 15 asked RIL to supply more than a third of peak output from KG-D6 fields to Anil Ambani Group's Reliance Natural Resources Ltd at USD 2.34 per million British thermal unit, a rate 44 per cent lower than government approved price for the fuel from the fields.