Hardy Oil May Review India Investment Amid Gas Price Uncertainty

Hardy Oil on Thursday said it may review its investment in India amid unattractive pricing and uncertainty surrounding long-term price outlook for natural gas sales.

The Aberdeen based firm is a partner of Reliance Industries (RIL) and BP in the D3 block in the Krishna-Godavari (KG) basin.

Business Standard newspaper, quoting from company’s half yearly report, said the joint venture (JV) partners might have to relinquish portion of the block owing to Indian defence ministry's new policy on access restriction.

It said India's Defence Research and Development Organisation has classified one-third of the D3 block as 'impact zone' and has imposed certain access restrictions to that area, Business Standard added.

Hardy has a 10 per cent stake in the block; RIL has 60 per cent, while BP holds 30 per cent. Reliance is the operator of the block.

"The new GoI (Government of India) pricing policy implies a significantly lower price than the previously-notified Rangarajan Committee formula. There remains some uncertainty surrounding a pricing premium for deep-water discoveries and the development of our D3 discoveries is dependent on the future long-term price outlook for gas sales. The JV is currently reviewing the appropriate way forward, taking into account policies recently announced by the Indian government and the overall prospectivity of the block," said Ian MacKenzie, chief executive officer, Hardy.

D3 is located off the eastern coast of India and is spread over an area of 3,288 km, in water depths of 400 metres to 2,200 metres.

Hardy said four gas discoveries have been made via the Dhirubhai 39, 41, 44 and 52 (KGV-D3-A1, B1, R1 and W1) exploration wells. The joint venture has acquired 3,250 km of 3D seismic data over the block.