May 7 (Bloomberg) -- India's top court ruled in favor of billionaire Mukesh Ambani's Reliance Industries Ltd. in a dispute between the world's richest brothers over gas from a field with $38 billion of reserves.
The Supreme Court based in New Delhi asked Reliance Industries and Anil Ambani's Reliance Natural Resources Ltd. to renegotiate their contract within six weeks saying the government has the right to set gas tariffs, according to a three-judge panel headed by Chief Justice K.G. Balakrishnan. Reliance Natural had sought to buy fuel at below state-set prices under the terms of a 2005 family accord.
Reliance Industries had its biggest gain in six months as the ruling may spur India's biggest company to explore for more fuel, easing shortages in Asia's third-largest energy consumer. The verdict may also encourage investment in India after Exxon Mobil Corp. and Royal Dutch Shell Plc shunned auctions of gas and oil blocks in part because of the Ambani case and state control of fuel prices.
"Investors have been waiting so long for a verdict," said Taina Erajuuri, who helps manage more than 1 billion euros ($1.3 billion) of emerging market stocks at Helsinki-based Fim Asset Management, including Reliance Industries. "There is this need for clarity."
Reliance Industries gained 3.8 percent to 1,046 rupees at 11:42 a.m. in Mumbai. Reliance Natural plunged 17.5 percent to 56.4 rupees.
Reliance Industries, which missed profit estimates in the three months ended March 31, is depending on revenue from gas and output from new fields to drive profit as refining margins remained weak after the financial crisis eroded demand for fuels. The explorer seeks to produce gas from additional areas in the KG-D6 field and the Bay of Bengal.
Krishna Godavari Field
The government in September 2007 set the price of gas from the Krishna Godavari field at $4.20 per million British thermal units when the price of crude oil is equal to or more than $60 a barrel. That's 79 percent higher than the price agreed by the brothers.
The case is SLP(C) No. 14997/2009 between Reliance Natural Resources and Reliance Industries in India's Supreme Court.
To contact the reporter on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net .
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