Friday , April 27 2018

BP, Reliance to revive India gas production, expand fuel sales

BP, Reliance to revive India gas production, expand fuel sales copy


BP Plc and Reliance Industries Ltd. will invest as much as $6 billion to revive gas output from offshore India and plan to expand their partnership to sell transport fuels amid efforts to boost the use of cleaner-burning energy in the world’s demand growth center.
The companies are resuscitating a partnership born in 2011, encouraged by several government reforms, including the freedom to price and market natural gas. Prime Minister Narendra Modi aims to increase the fuel’s share in India’s energy mix to 15 percent by 2020 from 6.5 percent.
BP and Reliance aim to develop about 3 trillion cubic feet of resources that will result in production of an additional 30 million to 35 million cubic meters a day of gas from the D6 block in the Krishna Godavari basin between 2020 and 2022, Bob Dudley, chief executive officer of BP, said in New Delhi. The companies have so far struggled to boost gas production in the deep water area off the South Asian country’s east coast.
“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. The project will contribute about 10 percent of the country’s projected gas demand by 2022 and can replace liquefied natural gas imports worth $20 billion.
Separately, the partners said they will expand their collaboration to sell conventional fuels such as diesel and gasoline, as well as renewable fuels, in India, which the International Energy Agency forecasts to be the fastest-growing oil consumer through 2040.

BP shares closed 0.1 percent lower to 460.95 pence in London on Thursday. Reliance shares rose as much as 0.9 percent to 1,395.80 rupees and traded at 1,390.95
rupees as of 11 a.m. in Mumbai on Friday.
“BP and Reliance are committed to being one of India’s preferred energy partners now and in the future,” Reliance Industries Chairman Mukesh Ambani said. “We are going to explore opportunities in both conventional and unconventional fuels.”
The companies will first award contracts for work in the R-series ultra-deep water gas fields in the block, lying 70 kilometers (44 miles) offshore. Plans for development of the satellite and D-55 fields in the block will be submitted to the government before the end of 2017, Dudley said.
Gas production from the KG-D6 block has fallen by more than 85 percent from its peak in 2010. Output was about 7.4 million cubic meters a day in the quarter ended March, compared with 54.5 million in the three months ended December 2010, just before BP acquired a 30 percent stake.

Reliance had initially projected peak volume of 80 million cubic meters a day from the block. The company blamed the underwhelming production on water and sand entering the gas producing wells and low flow pressure.
In addition, disputes with the Indian government over costs incurred on development of the block and pricing of gas led to Reliance and BP getting embroiled in several arbitration proceedings. The companies have continued with offshore exploration but paused development drilling as the suits drag on.
“We are pretty sure that we will get a fair outcome from the proceedings and we don’t think that these will come in the way of our future investments,” Ambani said. Oil Minister Dharmendra Pradhan said last year that the nation’s deep water gas fields will attract $20 billion of investments over the next five to seven years.

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