(BS)
Global energy giant BP Plc, which produces one-third of India’s natural gas, is targeting nearly 10 million cubic meters per day of additional output from the NEC-25 block in the Mahanadi basin, spurred by recent upstream reforms introduced by the Modi government.
Its chief executive Murray Auchincloss said India’s upstream oil and gas policy overhaul through a new legislation has made several improvements important for foreign investors and will help attract global players.
BP and its partner Reliance Industries Ltd (RIL) produce about 28 million standard cubic meters per day or almost a third of India’s total gas output, from their Krishna Godavari basin deepsea block KG-DWN-98/3 (KG-D6) in the Bay of Bengal.
The two are now looking to put into production discoveries in the Block NEC-OSN-97/2 (NEC-25) off the Odisha coast.
“Block NEC 25 represents an opportunity to unlock the hydrocarbon potential of a new hub on India’s East coast, with production potential of up to 9.9 mmscmd of gas,” Auchincloss said. “We and RIL with other industry operators in the area including ONGC are working with the Ministry of Petroleum and Natural Gas to progress development.” He did not elaborate.
BP-Reliance had in 2012-13 proposed a $3.5 billion plan for developing 1.032 trillion cubic feet of inplace reserves discovered in NEC-25. But the plan was delayed because of a dispute with upstream regulator the Directorate General of Hydrocarbons (DGH) over technical aspects of the finds.
They have renewed plans after the government led by Prime Minister Narendra Modi unveiled a series of reforms in recent years.
“Working in our partnership, RIL and BP have already developed three projects in KGD6 Block, which together are currently producing 28 mmscmd of gas,” he said. “We are working on multiple options to augment and sustain gas production from KGD6, such as infill drilling in the R-Cluster and Satellites Cluster, and well workovers on MJ.” Besides, the partners have two other exploration blocks that they had won in different rounds of OALP bidding – KG-UDWHP-2018/1 and KG-UDWHP-2022/1. “If successful, discoveries could be developed using some already existing infrastructure,” he said.
BP has been in India for over a hundred years, with its connection through lubricant seller Castrol.
India is amongst the fastest growing economies in the world, backed by industrial growth, infrastructure development, a young population and urbanization, and this is reflected by growth in its primary energy usage, the BP head, who was in India earlier this month, said.
“The country’s stable governance, policy support and access to a large high-capability talent pool makes investment here very attractive. Building on our long relationship, BP aims to be the trusted energy partner of choice to India. We will look to leverage and grow our current positions, bringing our global capabilities and technology to bear and deepening our partnerships,” he said.
And among the factors making India an attractive investment destination is a legislation that amended the Oil Fields (Regulation and Development) Act of 1948 by expanding its scope to include shale oil, shale gas and coal bed methane, in addition to oil and gas, while introducing sweeping measures aimed at improving the ease of doing business as well as providing fiscal and policy stability aimed to attract domestic and international investment.
The new legislation “made several improvements that are important for foreign investors like us,” Auchincloss told PTI in an interview.
The BP CEO was in India earlier this month, during which he met Prime Minister Narendra Modi as well as Oil Minister Hardeep Singh Puri.
“We believe the reforms can help mitigate risks and ensure operational clarity, creating an investor-friendly environment, supporting the modernisation of India’s oil and gas sector, and attracting global players,” he said.
He was deeply appreciative of the amendments made in the oilfield act to ease the way for increased foreign investment. He assured the Prime Minister that BP was working to support India’s energy needs in line with Modi’s vision of energy security for India with support from the ministry.
The new law gives policy stability and improved financial terms through a series of changes to the decades-old act. These include freedom to pursue international arbitration in the event of disputes, as well as offering a longer lease period.
India, which is 85 per cent dependent on imports for meeting its oil needs and buys nearly half of its gas needs from overseas, in recent years has undertaken a series of upstream reforms aimed at encouraging discovery of more oil and gas through increased exploration and bringing them to production quickly.
These include greater marketing freedom to producers and allowing companies to carve out areas for oil and gas exploration under the Open Acreage Licensing Policy (OALP).
Last year, BP and RIL teamed up with state-owned Oil and Natural Gas Corporation (ONGC) to bid for an oil and gas exploration block.
“RIL and BP teamed up with ONGC for the OALP-IX bid round to strengthen our bid for exploration rights in the Gujarat-Saurashtra basin. This was our first collaboration, bringing together ONGC’s experience as India’s largest oil and gas producer alongside the Reliance-BP joint venture’s technical expertise and private sector agility,” BP CEO said.
“We believe such an approach supports India’s aim of boosting domestic production and reducing reliance on imports by attracting investment through OALP. Our collaboration, sharing knowledge and expertise, has the potential to improve efficiency in exploration and production processes.” Both Modi and Puri encouraged BP to participate in the current bid round under OALP.
RIL holds 66.67 per cent stake in NEC-25 block, where 9 gas discoveries in the northern part and six in the southern area have been made. BP holds the remaining 33.33 per cent. Some of these discoveries had been relinquished for either not meeting timelines or being too small to develop.
Besides upstream, BP has a substantial presence in the downstream sector through its joint venture with Reliance Jio. Jio-BP has close to 2,000 petrol pumps in the country and is setting up a chain of EV charging stations.
“We aim to be a leader in mobility and first choice for our customers. We expect to see increasing demand in India for fuels and EV charging — and we are integrating to serve customers more efficiently, no matter what they drive,” he said.
“Our downstream retail JV with Reliance Jio-bp, delivering retail fuels, convenience, aviation fuels, biofuels, EV charging and LNG for trucking is doing really well and we expect to see substantial growth. We’re investing in advantaged and integrated positions where our brands, products and services can drive greater margins — and continuing to high grade our network of sites.” Auchincloss said BP is looking to grow its portfolio of marketing domestic gas and imported LNG to commercial and industrial customers.
“We aim to grow the portfolio through aggregating LNG demand and supplying this, leveraging our global LNG trading capabilities, and to grow our presence in the downstream gas value chain. And in fuels and convenience, we expect to see increasing demand for fuels including bio CNG and EV charging — and through our Jio-bp joint venture we are integrating to serve customers more efficiently,” he said.
