Millennium Post

BP CEO Dudley meets Minister Pradhan, rants about gas price

With delays in regulatory nod and gas price revision frustrating its attempts to reverse falling gas output from KG-D6 field, 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 on Tuesday to make a case for early decisions, officials said.
BP, which in 2011 bought 30 per cent stake in Reliance Industries' 21 oil and gas blocks, including KG-D6 for $7.2 billion, has been frustrated by the delays in getting approvals for plans to revive the sagging output from eastern offshore KG-D6 fields.

Officials said Dudley raised the issue of gas prices not being revised on the due date of 1 April as also KG-D6 revival plans getting stuck in redtape.

BP since coming on board in 2011 has been working to revive the output at KG-D6 field which currently at about 13 million standard cubic meters per day is one-fifth of levels achieved three years back.

Approvals, however, for the plans did not come and it was only after with a vigorous push by the then Oil Minister M Veerappa Moily that nod for routine works like annual expenditure plan came in the second half of 2013. Sources said BP is keen that a decision on gas pricing be taken at the earliest so that its investment decisions can be firmed up.

Dudley had in an interaction at the WPC on Tuesday stated that the company was ‘disappointed’ at the pace of approval in India and said the new government must reform its gas price regime for survival of the gas industry. ‘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,’ Platts, a global provider of energy-related information, quoted Dudley as saying.

BP, India's single largest foreign investor, and its partner RIL last month slapped an arbitration notice on the government for delay in revision of prices that were due from 1 April. Dudley said the government must reform gas price regime. ‘You just have to look at the natural gas prices around the world. It seems not right that it would be more economic to produce gas in Australia and sell it into India at $20 per million cubic feet, than be able to develop the resources in India,’ he said.

The previous UPA government had in December 2013 approved a new formula for pricing of all domestically produced natural gas from 1 April. The formula, which would have doubled the current $4.2 per million British thermal unit, could however not be implemented as elections were declared. The new BJP government has been reviewing the formula but is yet to take a decision.

‘I'm very hopeful that the price will move up, as per the previous government's decision, which has been put on hold. It's very important, for the entire offshore industry in India is at risk. I'm hopeful that the new government will move the price up. It's actually essential to preserve that industry,’ Dudley was quoted as saying.

Mukesh still feels RIL will reap doubled gas price

Mumbai: Facing criticism from certain political quarters over natural gas price hike, Reliance Industries Chairman Mukesh Ambani on Wednesday  expressed confidence the company will win public trust as it believes in creating wealth and livelihood for millions in a transparent manner.
‘We are here to win trust and we will win this with truth and transparency,’ Ambani told the shareholders at the 40th AGM here in response to an indirect question on Aam Aadmi Party's (AAP's) allegations against the company.

He went on to add that ‘I want to assure you that we are a mature corporation and we are committed to creating value...I am a big believer that we should work with people who have different views than us, convince them that what we are doing is right’.

AAP leaders, including its national convener Arvind Kejriwal, alleged that the proposed gas price hike would lead to further inflation and only benefit RIL.

RIL Chairman said: ‘Timely regulatory approvals and market-based gas prices are the key to developing these resources. We along with our partners BP and Niko have initiated the arbitration process seeking implementation of the domestic natural gas pricing guidelines 2014.’

Responding to a shareholder's view that there is a 'Krishna-Sudama' relationship between the RIL investors and shareholders as far as the issue of higher dividend was concerned, Ambani said the company treats all its shareholders on par.

‘Our relationship with the individual shareholder, however small, is very serious. In terms of returns, all shareholders who have been perpetual shareholders of Reliance for the past 40 years have had the highest returns not only in the country but anywhere in the world.’
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