Let market set gas price: BP

Terming the decline in gas production from the KG-D6 block of Reliance Industries Limited (RIL) as ‘disappointing', BP plc, joint venture partner of RIL, has warned that lack of free market-related pricing of domestic gas would hit the energy security of India and create obstacles in the path of development of oil and gas industry. These sentiments were conveyed by the representatives of BP during their recent meeting with Joint Secretary (Exploration), Aramane Giridhar. “A forward looking gas policy framework with a transparent market-determined price would help attract more capital into a high risk, higher cost and not so prolific upstream oil and gas sector in India,” the representation said. D6 production BP said the decline in production in D6 block had been disappointing. However, it pointed out that gas in the block was in a number of separate areas which required further development stages. “The investments in the infrastructure already in the block will be utilised through the development of these areas and we are currently working on detailed plans. Despite having already discovered volumes of natural gas domestically, the current domestic gas pricing regime, relative to the prevailing international market for gas, threatens the likely development of India's own resources, and is likely to perpetuate the development of the industry and production in other countries,” it said. The BP delegation told Mr. Giridhar that various issues could be addressed by allowing for free market-related pricing for domestic gas. “In addition to being consistent with the production sharing contracts (PSCs), this would help the government maximise its value for the natural resource by obtaining an international price for calculating its royalty, taxes and profit share revenues. “I am sure you (Mr. Giridhar) will agree that an effort of this scope and scale would require the government and RIL/BP to partner in a transparent and efficient manner, and to resolve these issues. BP stands ready to be partner with India for a long-term as it develops its oil and gas industry,” it said. Keywords: Reliance Industries Limited, KG-D6 block