The Indian government urgently needs to reform the gas price regime, London-based energy firm BP’s chief executive Bob Dudley said in Moscow on Tuesday.
A news report by Platts quoted Dudley as saying that his company’s experience in India so far had been “disappointing.” Oil and gas companies, such as BP and its Indian partner Reliance Industries (RIL), have been vehemently demanding a hike in the price of domestic natural gas as they claim that the current prices aren’t remunerative given the increased costs of hydrocarbon exploration and production.
In 2011, BP paid $7.2 billion to pick up a 30% stake in RIL’s main oil and gas blocks in India. The deal, according to RIL, was necessary as the company was banking on BP’s expertise in deepwater drilling to address the challenge of declining gas production at the former’s primary gas reservoir, KG-D6, which lies off the eastern coast of India.
"It has been disappointing, the pace at which certain things have been approved — the price rising up towards a market price, there have been a number of delays in seabed surveys and the appraisals of various projects," Dudley was quoted by Platts as telling journalists at the World Petroleum Congress in Moscow.
"You just have to look at the natural gas prices around the world. It seems not right that it would be more economical to produce gas in Australia and sell it to India at $20 per million cubic feet, than be able to develop the resources in India." Platts quoted Dudley as saying that he hoped gas prices in India would be revised upwards as per the earlier government’ decision, which has been put on hold.
The price of gas was fixed at $4.2 per million British thermal units (mmBtu). In December 2012, a committee led by C Rangarajan, then chairman of the Prime Minister’s Economic Advisory Council, suggested a new formula for pricing natural gas to make it more market-linked.
BP, RIL and their third partner in India, Niko Resources, issued an arbitration notice to the government last month seeking expeditious enforcement of new gas prices.
Chief executive meets oil minister
With delays in regulatory nods and gas price revision frustrating its attempts to reverse falling gas output from KG-D6, BP chief executive Bob Dudley met petroleum minister Dharmendra Pradhan to press for early decisions. Dudley, along with BP India head Sashi Mukundan, met Pradhan on the sidelines of the World Petroleum Congress to make a case for early decisions, officials said.
Source: FE
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