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* To sell at $4.2/mmBtu until new govt takes over -source
* Output from D6 at about 13 mmscmd-govt source (Adds background)
By Nidhi Verma
NEW DELHI, March 28 (Reuters) - Reliance Industries and its partners should continue to sell gas atcurrent prices from its east coast block following a delay to anew pricing regime ordered by India's election authority, agovernment source said on Friday.
Reliance's five-year gas sales pacts with sectors includingfertiliser makers and power will expire on March 31, requiringbuyers to sign new contracts for supplies from its D6 block inthe Krishna Godavari basin.
"$4.2 (per million British thermal unit or mmBtu) willcontinue to be in force until the Code of Conduct is lifted,"said the source, referring to rules restricting policy shiftsbefore elections. India goes to the polls on April 7.
The oil ministry informed the upstream regulator - theDirectorate General of Hydrocarbons (DGH) - of the pricingdecision after it was cleared by Oil Minister Veerappa Moily onFriday.
"The DGH will have to now inform the companies concerned,"said the source, who requested anonymity due to the sensitivityof the matter.
Both Reliance and the upstream regulator declined immediatecomment.
The Election Commission asked the government to defer anincrease in gas prices until the completion of the five-weekgeneral election in the middle of May.
The cabinet last year approved a formula, linking prices oflocally produced gas with global benchmarks, that could havenearly doubled gas prices from the current $4.20 per mmBtu.
India's main opposition party Bharatiya Janata Party (BJP),which surveys show is on course to become the largestparliamentary party, has said it would review the gas pricingformula if elected.
Demand for gas in India far outstrips domestic supply, butthe government has kept prices below global market levels forproducers of fertiliser and electricity, deterring investment indomestic exploration and production.
India, the world's fourth-largest energy consumer, has fewenergy resources other than coal, which meets 56 percent of itsenergy needs.
Gas output from the D6 block has fallen sharply since 2010.Reliance says the decline is due to the geological complexity ofthe block while the government believes contractors have failedto drill the promised number of wells.
The block, in which BP has a 30-percent stake andCanada's Niko Resources owns 10 percent, currentlyproduces about 13 million cubic metres of gas per day, thesource said.
A fertiliser industry source said industry buyers would signan agreement with Reliance at $4.2 per mmBtu, once minor detailsregarding marketing margins and credit terms are resolved.
(Reporting by Nidhi Verma; editing by Douglas Busvine and JasonNeely)
