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The Indian government risked a chance to fix the gas prices and contracts for the development of natural gas and oil exploration projects. The case of the Indian supreme court lawsuit over natural gas contract between Ambani may fail quotes from several companies for investment oil on natural gas exploration projects and sources of energy. The Indian government hopes the case can be resolved lawsuit Ambani well, so that the Indian government can improve the gas and oil prices in the country. But some analysts argue the case does not affect the Ambani investors to invest in mining projects, particularly natural gas exploration and energy sources.

A failure to attract bids from global companies would be a setback for India’s efforts to explore for new energy sources and reduce dependence on imports. Exxon Mobil Corp. and Royal Dutch Shell Plc, the world’s biggest oil companies, may invest in countries where they can sell fuels at market prices, according to oil analyst Tony Regan, who said moves by the Ambanis yesterday to end their dispute are unlikely to sway investors.

“People are concerned about pricing and government policy,” said Regan at Singapore-based oil consultancy Tri-Zen International, who previously worked for Shell’s liquefied natural gas business. “There is still a lack of clarity.”

Exxon spokesman Patrick McGinn, and Shell’s Adam Newton said in separate e-mails the companies don’t comment on pending tenders. The two companies as well as Chevron Corp. haven’t bid for Indian fields since the government started auctioning them in 1999 under its New Exploration Licensing Policy.

Manoj Warrier, a spokesman for Mukesh Ambani’s Reliance Industries Ltd., declined to comment on whether the dispute would influence the outcome of India’s oil auction. Jayarama Chalasani, chief executive officer of Reliance Power Ltd., an Anil Dhirubhai Ambani Group company, didn’t respond to questions e-mailed to him.

‘Wrong Signals’

“The ongoing dispute over gas has sent many wrong signals,” V.K. Sibal, the regulator managing the field auctions, said on Oct. 5. “We don’t expect a huge response this year.”

Anil Ambani asked his older brother to settle their dispute in a “constructive, cordial and conciliatory manner,” according a statement issued after he visited the holy shrines of Kedarnath and Badrinath in the Himalayas to seek “divine inspiration.” Mukesh’s Reliance Industries said in a separate statement the dispute is “not merely a family matter” and “vital national issues” such as government ownership of the gas and India’s energy security are at stake.

Reliance Industries won the field in an auction a decade ago. Anil says he has an agreement that requires Mukesh’s company to supply gas from the field to Reliance Natural Resources Ltd., which procures fuel for his group’s power projects, including one planned in north India.

Ambani Dispute

Reliance Natural has said the accord called for 28 million cubic meters a day of gas to be sold at $2.34 per million British thermal units for 17 years. Reliance Industries, which started production at the field in April, said the gas can’t be sold at less than $4.20 per million Btu, a price set by the federal government in 2007.

India’s government said in a Supreme Court filing that the production-sharing contract it signed with Reliance Industries, the operator of the field, must prevail over any private arrangement the company has for the sale of gas. The company has no right to sell the fuel without the state’s approval, it said in the affidavit.

“India needs to start anew once the dispute is over and let the market decide prices,” said Michael Economides, a professor at the University of Houston who advises oil companies and wrote an article on the Ambani dispute in the Energy Tribune last month. “That will attract the major oil companies to go to India with their technologies.”

Deepwater Technology

The government has said it wants to explore for oil and gas in deep waters in the Krishna-Godavari river basin in the Bay of Bengal and the coast off the Andaman and Nicobar islands to meet demand in the world’s second-fastest growing major economy.

“India needs majors such as Exxon as they will bring in the technology needed for drilling in deeper waters,” said Vijay Iyer, who advises oil and gas companies as a partner at Ernst & Young Pvt. at Gurgaon, near New Delhi. “I don’t see the majors coming in with the gas controversy.”

International companies have a better chance of finding oil in Nigeria, Brazil and the Gulf of Mexico and would prefer to drill there rather than in India, where the pricing risks are higher, Tri-Zen’s Regan said.

Last year, India’s offer of 57 blocks got bids for 45 areas after a seven-year income-tax holiday for gas production was scrapped and retained only for oil projects. The tax waiver has been restored for the 2009 auction. Of the 181 bids received in 2008, about 55 percent were for 10 areas.

source : bloomberg

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