Reliance Industries Can’T Be Blamed For Dip In Output From Kg-D6 Block Bp

BP does not expect any company to drill in Indian deep-sea basins at the current gas price, and endorses Reliance Industries' view that it neither hoarded gas, nor can it be blamed for the sharp decline in natural gas output from the KG-D6 block.

Sashi Mukundan, who heads BP's Indian operations, remains upbeat about the global major's multi-billion investment in Reliance Industries' oil and gas blocks even though the Mukesh Ambani-controlled company has faced various regulatory hurdles and in the recent past has had to deal with relentless public attacks from Arvind Kejriwal's Aam Aadmi Party.

During his brief stint as the chief minister of Delhi, Kejriwal had ordered the state's anticorruption bureau to file an FIR against Ambani.

BP plans to invest $10 billion in the next five years and wants a trusting relationship with authorities. "We need to move things forward. We have to find a solution and move on. We must work under an umbrella of trust, like we are on the same side and not adversaries," Mukundan told ET.

Reliance Industries can’t be blamed for dip in output from KG-D6 block: BP

The spate of troubles for KG-D6 has not led to second thoughts, said Mukundan. "No. We are looking at India in the long-term perspective. In India, things take time but they are finally done," he said. Mukundan said the current price of gas makes investment in challenging, high-risk deepwater regions unviable.

This would hinder gas output and encourage import of costly liquefied natural gas, Mukundan said. "No company would invest in deep water at the current price level. If gas is not produced, then LNG imports will rise. Already 30% of India's gas demand is met from LNG. For BP, it doesn't really matter whether we sell gas from deepwater in India or bring gas from some other part of the world as LNG. The country has to take a decision," he said. BP feels Reliance's response to the barrage of allegations against the company is backed by technical and geological data as well as global experiences in producing oil and gas from deepsea fields.

RILBSE 0.53 % has been blamed and penalised by the government for the sharp fall in gas production from KG-D6 and is being made to wait nervously for the final go-ahead to charge higher gas prices next month and is facing a regular barrage of attacks.

Commenting on the decline in output, Mukundan said it is not fair to blame RIL for the fall in production because across the world, estimated output stipulated in the field-development plan (FDP) often turns out to be different from the actual outcome.

Asked if the production-sharing contract (PSC) envisaged estimated production as an enforceable commitment, as interpreted by the former oil minister Jaipal Reddy and India's oil and gas regulator, Mukundan said he disagreed with this reading. "The answer is no. There's nothing in the PSC that says field development plan is a commitment. Show me one place where it says actual production should be equal to field-development plan. (But) the good news is that there are cases where actual production may be even better than the FDP."

RIL is waiting for the oil ministry to finalise the mechanism for bank guarantees it has to furnish to be eligible to charge the new gas price of around $8.40 from April 1. It has to furnish guarantees that will be encashed if it is proven that the company hoarded gas, or deliberately suppressed output as the Director General of Hydrocarbons suspects.

Source:- economictimes.indiatimes.com