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BP Plc Chief Executive Bob Dudley and Reliance Industries (RIL) Chairman Mukesh Ambani’s meeting with Petroleum Minister M Veerappa Moily on Friday seems to have borne fruit.
After the meeting, Moily said, “All the concerns of RIL and BP have been sorted out, except one. They have till now invested $12 billion and have promised to invest another $8-10 billion in the next few years. I will not allow anyone to create fear psychosis among investors. We are here to honour PSCs (production sharing contracts) and no rules will be flouted.”
The unresolved concern was a note being prepared by the ministry for the Cabinet on pricing of gas from the D1 and D3 fields.
Later, Dudley also met Finance Minister P Chidambaram and Prime Minister Manmohan Singh.
In another development, Communist Party of India stalwart Gurudas Dasgupta said at a press conference on Friday that RIL’s KG-D6 block contract should be terminated for “wilful” default in meeting production targets for the last three years. Dasgupta has demanded the termination in a letter to the prime minister.
Moily’s ministry is working on a Cabinet note that would decide whether RIL would be paid the old price of $4.2 a million British thermal unit (mBtu) for gas even after April 2014 — when the prices of domestic natural gas are to be almost doubled according to the Rangarajan formulae — for the D1 and D3 fields. The decisive factor would be whether there is an intentional hoarding of gas by the company.
The management committee that oversees exploration and production from KG-D6 had on October 1 rejected a RIL proposal to appoint an international consultant. It had also rejected the proposal for revision of in-place gas volumes and recoverable reserves from D1 and D3. RIL wanted to revise it from 10.03 trillion cubic feet, projected in 2006, to 3.6 tcf.
After the meeting, Dudley said his company was working hard to further develop offshore gas reserves in India. The British major has a 30 per cent stake in KG-D6. “Today, I have met senior leaders in the Government of India at New Delhi and discussed opportunities and challenges in the Indian energy sector at large and also specific to our deep-water exploration and development projects. We are committed to working together with the Government of India in their quest for energy security,” he said.
Meanwhile, Dasgupta, who has been relentless in his tirade against RIL and Moily, said in his letter to the prime minister, “I would request you to direct the petroleum ministry to begin proceedings for termination of the KG-D6 block for wilful default by RIL and taking over the block by the government.”
He alleged RIL had been in wilful default of the PSC for more than three years as the gas production has fallen to 9 million standard cubic metres a day, against the expected 80 mscmd. “They even refused to drill wells as directed by the government. The government should terminate their contract as per the PSC.”
