BP Indicates Desire to End India Gas Price Dispute

BP Plc has indicated its desire to end arbitration seeking higher prices for gas produced from KG-D6 block offshore India’s east coast.

The British oil and gas giant owns the block with Reliance Industries.

“The recent decision by the government on marketing, including pricing freedom for new production from deep, ultra-deep water and high-pressure, high-temperature areas provides clarity to end the pending gas pricing dispute,” Press Trust of India quoted BP India spokesperson as saying.

Earlier this week, Indian government announced a much liberalised natural gas exploration policy. Among the various measures that the nation’s cabinet approved to boost oil and gas production, is that of marketing and pricing freedom for new gas production from deepwater, ultra deepwater and high pressure-high temperature areas.

RIL, BP and their partner Canada’s Niko Resources had in May 2014 filed an arbitration seeking implementation of higher gas prices for the flagging KG-D6 block, Press Trust said.

Thursday’s cabinet decision that allows operators to charge up to $7.08 per million British thermal unit (mmBtu) as against the current $3.82 per mmBtu will be applicable to new gas production and not existing output from fields like Dhirubhai-1 and 3 and MA in KG-D6 block.

The new rate will apply to four satellite gas discoveries of D-2, 6, 19 and 22 as well as R-Series gas find in the same block. It will also be applicable for 1.4 trillion cubic feet MJ-1 discovery in KG-D6 block.

But that can happen only when arbitration and litigation directly on gas price are concluded or withdrawn, Press Trust added.