BP Group Chief Executive Bob Dudley was in India for a stopover, but the time that he spent in the Capital’s corridors of power on Monday sent the media into a tizzy. From meeting the Prime Minister, Manmohan Singh, to other senior Government officials, Dudley and Chairman, Reliance Industries, Mukesh Ambani, discussed wide-ranging issues related to their East Coast block, gas pricing, and sought a clear roadmap to make investments in the hydrocarbons sector more attractive.
Though the meeting with the Prime Minister was termed as a ‘courtesy call’, during their meeting with Montek Singh Alhuwalia, Deputy Chairman, Planning Commission and Secretary, Petroleum, Vivek Rae, the duo sought clarity on natural gas pricing, as the new price for the KG-D6 fields will be applicable from April 2014.
The current price of D6 gas is $4.2/mBtu. Both the companies have already expressed concern over the Rangarajan Committee recommendations on the gas pricing formula, and sought a clear roadmap, as future investments depend on it.
Ahluwalia told newspersons that, “They are concerned. They are keen that the Government comes out with a view on gas pricing.” They were informed by Ahluwalia that the process was under way.
“I wasn’t able to tell him (Dudley) what we are going to decide,” he said, adding that “I did say that there is an Empowered Group of Ministers and it will be considering the Rangarajan Committee recommendations.”
After meeting Rae, Dudley said the Secretary was apprised of the developments in KG-D6 block. The recent developments in the block have shown exciting results/prospects. “As the largest investor in the Indian sector, we have come to review progress of plans and are very pleased to see the advances,” he added.
In fact, positive signals are coming from D6 block, where BP and Niko Resources are RIL’s partners, he said. MJ1, a new area discovered in the existing producing gas fields in this block has shown signs of having more gas.
Initial assessment based on which drilling started on March 1, showed that the area could hold significant gas potential. Only after the testing is done will the contractors know the true potential of the area and then an official communication will be made and a discovery announced.
D6 block has been drawing public attention because of its falling output after hitting a peak of 60 million standard cubic metres a day (mscmd) in end 2009. The major fields in the block D-1 and D-3 and MA together are currently producing less than 16 mscmd. If all the four satellite fields coupled with R-Series discovered in the D6 block go on stream then the estimates show that the operator can produce additional 30 mscmd
On February 19, Dudley, who came as part of the entourage of the British Prime Minister, David Cameron, had met the Petroleum and Natural Gas Minister, Veerappa Moily, along with Ambani. The two had updated the Minister on KG-D6 block enhancement plan designed to increase production and their joint future plans in India.
Under the KG-D6 block enhancement plan, BP and RIL are planning to invest in a series of projects to develop around 4 trillion cubic feet (tcf) of discovered natural gas resources from the block. At current international liquefied natural gas prices, it would cost more than $50 billion to import this volume of gas into India.