A gas dispute between the Ambani brothers, which is linked to India’s biggest family succession feud, escalated on Friday after a company controlled by one of them asked the supreme court to intervene.

Reliance Natural Resources, controlled by Anil Ambani, sought to compel Reliance Industries, run by Mukesh, his estranged older brother, to come to the negotiating table to settle the dispute.

The group asked the court to order Reliance Industries to implement the conditions of a lower court ruling that it claimed forced Mukesh’s flagship company to provide it with gas at a lower price.

“Reliance Industries continued to adopt a completely obstructionist position and conveyed its reluctance to sign agreement as per court order,” Reliance Natural Resources said.

Reliance Industries has signalled its own intention to appeal to the supreme court in the dispute, which has intensified after the Bombay High Court told the pair last month to settle the matter out of court.

The row dates back to the division between the brothers of the empire of Dhirubhai Ambani, their late father, which was negotiated in 2005, with Kokilaben Dhirubhai Ambani, their mother, acting as mediator.

How the pressure came to a head

● 1999: Reliance Industries wins exploration rights for the KG-D6 oil and gas block off eastern coast of India.
● July 6 2002: Reliance’s founder, Dhirubhai Ambani, dies. Differences arise between his sons, Mukesh and Anil Ambani, over control of the group of companies.
● June 18 2005: With their mother, Kokilaben, as mediator, the brothers agree to demerge their father’s empire. Mukesh gets Reliance Industries with its gas, oil and petrochemical businesses, while Anil takes over the group’s telecoms, power plant and financial arms.
● Nov 18 2006: Anil’s Reliance Natural Resources files a case against Reliance Industries in the Bombay High Court. Anil’s company claims that, under the demerger agreement, Reliance Industries must provide it with gas from the KG block at $2.34 per million British thermal units.
● September 13 2007: The government fixes the gas pricing at $4.2 MMBtu.
● June 15 2009: The Bombay High Court supports Reliance Natural Resource’s price.
● July 2-3 2009: Both sides say they will take matter to the Supreme Court.

Source: Macquarie Securities

Mukesh took over the oil and gas, refining and petrochemical businesses under Reliance Industries while Anil assumed control of the power plant business and telecoms and finance units.

But in 2006, Anil’s Reliance Natural Resources filed a case against Reliance Industries, claiming it had reneged on part of a promise under the demerger agreement to supply gas from its KG Basin field to power stations the younger brother planned to build.

Reliance Natural Resources claims the brothers had agreed Reliance Industries would supply it with the gas at $2.34 per million British thermal units – the price it had earlier set with a state-run electricity company.

But Reliance Industries claims the agreement was always subject to approval by the government. In 2007, a ministerial committee set a price of $4.20/MMBtu.

The government said last month the gas was state property, implying the brothers were not entitled to set a price between themselves for the resource.

Under India’s production- sharing contract system, the government collects a share of the profits from oil and gas field operators.

Reliance Natural Resources said the Bombay High Court ruling allowed for the government to still claim its share of the profits at the price set by the ministerial committee – $4.20/ MMBtu – even if Reliance Industries provided gas to the younger brother’s companies at the lower price.

“The high court order fully protects the economic interest of the government,” Reliance Natural Resources argued.

Reliance Industries has countered that only the price approved by the government applies.