India invites BP and Reliance to invest in fuel retailing

  • India invites BP and Reliance to invest in fuel retailing

India invites BP and Reliance to invest in fuel retailing

BP plc and Reliance Industries Ltd. on Thursday said they plan to bring 1 Bcf/d of natural gas capacity onstream between 2020 and 2022 from three deepwater gas fields offshore India that hold an estimated 3 Tcf of discoverable resource.

Reliance holds a 60 per cent stake in the gas block in the Krishna Godavari (KG) basin and BP owns 30 percent, while Canadian company Niko Resources Ltd holds the remaining share.

"BP and Reliance have now agreed to award contracts to progress the development of the "R-Series" ultra-deep water gas field in Block KGD6 off the east coast of India".

The strategic partnership will bring in additional 30-35 billion cubic meter (bcm) of natural gas, over the next three to five years and also look at jointly exploring fuel retailing business, BP CEO Bob Dudley and RIL chairman said in a joint press conference today.

The companies intend to file development plans for the other two projects with the Indian government by the end of this year, BP said.

"Together with Reliance I want to reinforce our commitment to working with the government to support the prime minister's call of import substitution and the development of the gas-based economy", Dudley said.

Petroleum Minister Dharmendra Pradhan during his meeting with the two company heads invited BP and Reliance Industries to invest in fuel retailing.

He termed the collaboration between the two companies as "new and historic cooperation" and highlighted that they will also explore trading of fuel and carbon emission trading.

The partnership goes back to 2011, when BP paid United States dollars 7.2 billion for a 30% stake in the blocks operated by Reliance (60% stake). On the arbitration proceedings initiated against the government, especially the one regarding gas pricing, Ambani said the partners were "pretty sure" that they will get "a fair outcome".

The announcement played up the economic benefits in India where energy regulators have been talking about allowing market prices for gas from new developments, as part of the program to sharply reduce gas imports over the next 5 years, by encouraging Indian projects.

The two companies will jointly explore options to develop differentiated fuels, mobility and advanced low carbon energy businesses in India, as India transitions to a low carbon world.

RIL-BP now produce gas from Dhirubhai-1 and 3 fields and oil and gas from MA field, three of the over one- and-half dozen discoveries made in KG-D6 block.

The gas joint venture is marketing some of the LNG sourced from BP's portfolio.

Reliance Industries Limited (RIL) is India's largest private sector company, with a consolidated turnover of INR 330,180 crore ($ 50.9 billion), cash profit of INR 42,800 crore ($ 6.6 billion), and net profit of INR 29,901 crore ($ 4.6 billion) for the year ended March 31, 2017. The International Energy Agency expects India to account for a quarter of global energy use by 2040.