India's Supreme Court last week ruled that Reliance Industries Ltd. (500325.BY) doesn't have to abide by the terms of a family agreement when supplying natural gas to Reliance Natural Resources Ltd. (532709.BY).

It said a government production sharing contract should take precedence, meaning that Reliance Industries can sell gas to Reliance Natural Resources at a government-set price, rather than at the much lower rate set in a 2005 agreement between the two companies.

Reliance Industries is controlled by billionaire Mukesh Ambani, while Reliance Natural Resources is run by his brother, Anil.

"We understand that the Supreme Court verdict has upheld the sanctity of the production sharing contract. BP strongly supports the notion of the sanctity of contracts--long term stability and regulation--in order to encourage companies to make investment decisions," a BP spokesman told Dow Jones Newswires.

By underlining its support for government production sharing contracts, the ruling has cleared up uncertainties surrounding such contracts and removed a major concern for international investors, analysts said.

The Ambani feud affected India's last auction of oil and gas exploration blocks in October, as major global companies steered clear because of worries about the clarity of government contracts, as well as weak global demand.

In a previous auction, BP had signed a production sharing contract in a consortium with Reliance Industries for a deep water exploration block.

Source: Wall Street Journal