Reliance Industries (RIL)’s chairman Mukesh Ambani and British Petroleum (BP)’s CEO Bob Dudley, representing their joint venture (JV) that operates the KG-D6 gas and oil basin off the east coast, met the minister concerned, Veerappa Moily, on Friday to sort out matters relating to the delay in getting a higher price for gas produced from the basin.
Canada’s Niko Resources is the minority partner in the 60:30:10 JV with RIL and BP.
The two corporate luminaries promised investment worth $8-10 billion over the next four years in the country’s most prolific hydrocarbon block, production from which has declined drastically in recent times.
Moily appeared satisfied with the duo’s commitment conveyed during the meeting and said that the production from the KG-D6 basin will double in the same period.
“There is only one matter, which we are taking to the CCEA (Cabinet Committee on Economic Affaris). The proposal is being finalised. There is a contract between the government and the contractor (RIL-BP)and all will be done according to the contract,” said Moily.
This is the duo’s first meeting with Moily since February. Then, Ambani and Dudley had raised the issue of the Comptroller and Auditor General of India wanting to do a performance audit of the operators at the KG-D6 basin.
At the time of getting the government contract, it was projected that RIL with its joint venture partners BP and Niko, will reach the gas production level of 80 million metric standard cubic metres per day (mmscmd) by April 2012.
However, in July this year, the JV was producing less than 14 mmscmd of gas. This drastic fall in gas production has resulted in controversial shortfall of gas, affecting key sectors of the industry like power, steel and fertilisers.
Moily did not clarify whether the increase in production would be from the current level of less than 20 mmscmd or would double from the originally projected production of 80 mmscmd.
He did not also clarify whether the investment proposed in Friday’s meeting would be in addition to the current investments or if it would be part of the previous projections.
Even though the CCEA has approved a price of $8.4 million metric British thermal unit (mmBtu) for the operator from April 2014, there have been objections from all political quarters as well as from within the oil ministry against the decision.
The Standing Committee on Finance has reprimanded the government for proposing any hike in the price of gas for the operator before it meets its previous commitment of producing gas at the cost of $4.2 per mmbtu.
After the meeting, BP’s Dudley said that he met senior leaders in the government and discussed issues related to deep water exploration as well.
The gas opera
Oil minister Moily says gas output from the KG-D6 basin will double in the next four years
Ambani, Dudley and Moily met on Friday for the first time since February, following the controversial shortfall in gas supplies that was said to have violated contractual obligations of RIL-BP-Niko towards the government
Key sectors of the industry like power, steel and fertilisers suffered due to shortage of gas
RIL wants the government to accept proposed higher price of KG-D6 gas supplies, but the latter is reluctant to oblige
BP keen to consider deep water exploration as well
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