New Delhi: BP Plc, Europe's second-largest oil company, on Thursday said the delay in implementation of a natural gas price hike was frustrating as the delay was holding back investments.
BP, whose USD 7.2 billion investment in 2011 is the largest foreign investment in the energy sector in India, has lined up projects that will reverse the sinking natural gas production from eastern offshore KG-D6 fields. The investment, however, is unviable at current USD 4.2 per mmBtu gas rate.
"We are ready to go ahead with our first project which is probably a USD 4 billion project. We are getting ready to potentially move that forward (but) are waiting for the gas price decision. So is that frustration, yes because it was decided last June 2013," said Sashi Mukundan, Regional President and Head of Country (India), BP Group, here.
He was replying to a question at the Economist India Summit here. He was asked if delays in India were frustrating.
The government had in June 2013 approved a new gas pricing formula, which would have doubled the rate on its implementation from April, 2014.
The formula was notified in January 2014 but the Oil Ministry delayed announcement of a new rate, during which time general elections were announced and Election Commission asked the government to postpone implementation of the decision till completion of the polls. The price hike, which was postponed to June 30, was again put off by another three months by the new government pending a comprehensive review.
Mukundan said after the formula was notified in January, only input numbers had to be keyed in and a new rate announced but this was delayed.
"For whatever reason the Election Commission stopped that and now the new government which is for its own reasons reviewing it for 90 days. So September 30th is going to be a important day in terms of what happens with gas price.
"Whether they will announce or not but our decisions meanwhile are held back because we can't make a long term USD 4 billion investment without knowing whats going to be the policy on gas price," he said.
Stating that urgent business decisions need to be made, he said China had announced a new gas price on June 27 and implemented it on June 28, 2013 while India is still debating.
He, however, said BP had a long term commitment to India.
"We are here for the long term because our energy business is such that it goes in multi decades. So from that standpoint, we recognise that we need to sit, wait and see what happens," he said.
BP had in 2011 bought 30 percent stake in Reliance Industries' 21 oil and gas blocks including Krishna Godavari basin KG-D6, for USD 7.2 billion. It has drawn elaborate plans to put satellite discoveries in the KG-D6 block on production as well as interventions to reverse the declining trend at the main fields in the block.
