Niko, which defaulted on payment of loans to its lenders, has been unsuccessful in seeking a possible buyer for its 10% stake in Bay of Bengal block KG-D6 or securing financing for its share of the $5-6 billion R-Cluster, Satellite Cluster and MJ development projects in the block.

In its third quarter earning statement last week, RIL stated that Niko “defaulted on Cash Calls and accordingly default notice was issued as per the provision of Joint Operating Agreement (JOA)”.

“Since Niko did not cure the default within the default period, RIL and BP issued notice to Niko for withdrawal from Production Sharing Contract (PSC) and JOA and assign the participating interest to RIL and BP,” RIL said. “In response to the notice, Niko has served notice of Arbitration.”

Reliance is the operator of KG-D6 block with 60% stake and UK’s BP has 30% interest.

Niko, in a corporate update, said it has on December 17, 2018 “received a notice from the non-defaulting parties requiring the subsidiary to withdraw from the KG-D6 PSC and JOA”. The company said it was evaluating its legal options regarding the notice.

Niko decided not to pay a KG-D6 Block cash call that was due in early October 2018. This led to Reliance Industries slapping a default notice under the production sharing contract (PSC).