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Updated: October 18, 2013 23:02 IST

Contract has no fixed output target: BP-RIL

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File photo of Chairman of Reliance Industries Mukesh Ambani and BP CEO Robert Dudley.
File photo of Chairman of Reliance Industries Mukesh Ambani and BP CEO Robert Dudley.

Both plan to invest $8-10 billion to produce more gas

Global oil giant BP and its partner Reliance Industries Ltd. (RIL), on Friday, promised to invest $8-10 billion in producing more gas, but voiced concerns over a double penalty being sought to be imposed on them for the KG-D6 fields output not matching targets.

BP Chief Executive Bob Dudley and Reliance Industries Chairman Mukesh Ambani first met Oil Minister M. Veerappa Moily, and then followed it up with a meeting with Finance Minister P. Chidambaram.

The meetings come at a time when the Oil Ministry at the insistence of the Finance Ministry is seeking to deny RIL-BP a gas price revision for producing less than projected gas from their eastern offshore KG-D6 fields.

While Mr. Moily said issues surrounding KG-D6 were discussed in the meeting, Mr. Dudley said BP was “committed to working with the Government of India in their quest for energy security.’’

“I think we are working very hard to develop further gas reserves in India,” Mr. Dudley said after meeting Mr. Chidambaram.

Mr. Dudley and Mr. Ambani, who were accompanied by BP India head Sashi Mukundan and RIL Executive Director P. M. S. Prasad, explained how it was not possible to hoard gas and that the penalties that were being sought to be imposed were in violation of the signed contract.

Mr. Ambani said if the government was citing the production sharing contract (PSC) to say that no international expert could be appointed to verify the reasons for the fall in KG-D6 output, then how were RIL and BP being penalised based on the recommendations of the one-man reservoir expert, P. Gopalkrishnan, appointed by the DGH.

Mr. Moily said the Cabinet Committee on Economic Affairs would decide on the issue of not applying the new gas price of $8.4 per mmBtu into force from April 1, 2014, to the currently producing D1&D3 gas fields in the KG-D6 block till such time that it was either proved that the fall in output to one-sixth was not deliberate or that the shortfall in production during last three years was made up.

“There is only one issue that is pending. We have resolved all other concerns of theirs,” Mr. Moily said, adding that inputs from the Finance Ministry and the Planning Commission had been received on the issue, based on which a final note for the Cabinet would be moved next week.

He said RIL-BP planned to invest $8-10 billion in bringing to production satellite fields around currently producing D1&D3 fields in the KG-D6 block by 2016-17.

“We are here to honour the production sharing contract (PSC). No rule will be flouted by the Ministry or anybody. We will ensure no rule is flouted by anyone,” he said, adding that the signed contract would be followed in letter and spirit.

RIL and BP said the PSC did not provide for any fixed output targets, and the projections made in investment plans were only indications and not firm commitment.

“This is my fourth visit to India this year, and, as always, I am very pleased to be here. Today, I have met senior leaders in the Government of India at New Delhi and discussed opportunities and challenges in the Indian energy sector at large and also specific to our deep water exploration and development projects. We are committed to working together with the Government of India in their quest for energy security,” Mr. Dudley said.

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It is unreasonable for DGH to insist on their one person authority's
finding be accepted by RIL and that DGH would impose fine on RIL for
non-performance. Why don't they go for an independent arbitration panel
to determine if non-performance is due to technical problems or

from:  Suvojit Dutta
Posted on: Oct 19, 2013 at 05:19 IST

The wells not producing as per RIL can be taken over by ONGC to ascertain the
potential and make profit at higher price for gas since ONGC is subsidizing the PSU
oil marketing companies .RIL should not have any objection since whatever money
spent by them is recovered already by sale of gas.

from:  sbalaraman
Posted on: Oct 18, 2013 at 21:28 IST
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