BP, Reliance to submit KG block development plan soon

BP, Reliance to submit KG block development plan soon

New Delhi: Reliance Industries and joint venture partner BP Plc will submit a single development plan for the entire KG D6 oil and gas block to the government in a few weeks, the head of BP’s Indian unit said.

The D6 gas output has been declining for more than a year, resulting in a sharp fall in India’s gas output and forcing the country to resort to increased imports of expensive liquefied natural gas (LNG) to meet demands of its expanding economy.

Gas output, currently around 37-38 million standard cubic meters a day (mscmd), may average 27.60 mscmd in the fiscal year starting April, about 66% lower than initially estimated, a government source said earlier this month.

A single development plan for the entire KG D6 block, compared to current norm of field-wise plans, will bring more certainty and comfort to customers, he said.

BP acquired stake in 23 oil and gas blocks in India, some in the KG block, from Reliance Industries in a $7.2 billion deal last year.

The two companies aim to boost production to a sustainable level from both the existing fields and the next wave of developments -- D6 satellites & R Series and the NEC-25.

Reliance, India’s biggest company by market value, has been under pressure from the government and investors because of the falling gas output, and its market value tumbled 35% in 2011, underperforming the main Mumbai market.

Earlier, Mukundan said the British oil and gas major wanted a predictable pricing regime for natural gas in India, as this is vital for developing future projects in the country.

“Clarity on gas pricing is vital for the development of the ‘next wave´ of projects, which will add production beyond 2015 but for which investment decisions need to be made now," he said at an event.

Gas prices in India are set between $4 to $6 per million British thermal units (MBTU) but are far below double-digit prices globally, in part to be competitive with cheap local coal.

Reliance shares closed down 4.7% at 781.45 in the BSE that fell 2.7%.