Unhappy with the way the exploration and production sector in the country has been functioning, Sashi Mukundan, regional president and country head of British Petroleum, India, expressed his displeasure on the same at a public forum today.
Mukundan said, “We need to create a distinction between the regulator and policy maker and finally in the case of gas, like in the case of oil, provide flexibility in terms of marketing and pricing freedom in order to manage both technical and commercial risks. So that India can build a gas based economy.
He added that an overall a shift in thinking from short-term to a long-term is required. "A question to ask would be what impact would you want regulations and policies to have 10-20 years down the road when the economy is looking is for more energy with its average growth of around 7 per cent plus.”
The government last month, amended the KG-D6 contract to formally induct BP as 30 per cent partner. This, when BP, last February, acquired 30 per cent stake in 21 blocks held by Reliance Industries in a $7.2-billion deal.
The firm had been waiting for formal signing of contracts since August 2011 when the government approved this deal. Also, of the 23 blocks, the government did not approve RIL and BP's partnership in two blocks due to technical reasons.
Also, the government has rejected Reliance Industries' demand for a revision in the KG-D6 gas price. According to the government, the $4.2 per million British thermal unit, rate for five years was not only agreed to by RIL but also upheld by the Supreme Court.
Last month, the petroleum ministry rejected RIL's contention that charging of marketing margin on gas was an issue between the buyer and the seller and said that the Petroleum and Natural Gas Regulatory Board (PNGRB) will take a final call on the issue.
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"Experience shows that countries which have developed a comprehensive infrastructure and provided the right market signals including pricing and marketing freedom have been able to attract investment from diversified sources. India needs to examine what is the purpose for E&P," added Mukundan.
Mukundan said, "We need to look at how we can remove ambiguity in functioning of the sector and the production sharing contract. We need to provide flexibility to the contractors so that they can operate efficiently in terms of exploration and exploitation with in the contractual framework."