 "RIL-BP to invest $8-10 billion to produce more gas")
Global oil giant BP Plc and its partner Reliance Industries today promised to invest $8-10 billion in producing more gas, but voiced concerns over a double penalty being sought to be imposed on them for KG-D6 fields output not matching targets.
BP Chief Executive Bob Dudley and Reliance Industries Chairman Mukesh Ambani first met Oil Minister M Veerappa Moily and then followed it up with a meeting with Finance Minister P Chidambaram.
Dudley, on his fourth visit to India this year, also had a meeting planned with Prime Minister Manmohan Singh.
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The meetings come at a time when the Oil Ministry at the insistence of the Finance Ministry is seeking to deny RIL-BP a gas price revision for producing less than projected gas from their eastern offshore KG-D6 fields.
This punishment is on top of $1.8 billion penalty that is already being imposed on them for the same reason. Also, the Directorate General of Hydrocarbons (DGH) is seeking to strip them off 8 gas discoveries holding 1.15 trillion cubic feet of reserves worth $14 billion.
While Moily said issues surrounding KG-D6 were discussed in the meeting that lasted more than one hour, Dudley said BP was "committed to working with the Government of India in their quest for energy security".
"I think we are working very hard to develop further gas reserves in India," Dudley said after meeting Chidambaram.
Dudley and Ambani, who were accompanied by BP India head Sashi Mukundan and RIL Executive Director P M S Prasad, explained how it was not possible to hoard gas and that the penalties that are being sought to be imposed were in violation of the signed contract.
Dudley, whose firm in 2011 invested $7.2 billion in India, is believed to have told Moily that no investment will come in oil and gas hunt if signed contracts are not honoured.
He asked why his company was being penalised without a fair trial. His contention was that it has not been proved that RIL-BP deliberately produced less than targets so how can they be penalised.
Ambani, on the other hand, said if the government is citing the production sharing contract (PSC) to say that no international expert can be appointed to verify reasons for fall in KG-D6 output, then how was one-man reservoir expert P Gopalkrishnan appointed by DGH and on whose recommendations RIL and BP were being penalised.
Moily said the Cabinet Committee on Economic Affairs (CCEA) will decide on the issue of not applying the new gas price of $8.4 per mmBtu into force from April 1, 2014 to the currently producing D1&D3 gas fields in KG-D6 block till such time that it is either proved that the fall in output to one-sixth was not deliberate or that the shortfall in production during last three years is made up.