BP Plc pitches for infra sharing with cos like ONGC

Speaking at the India Energy Forum of CERAWeek, BP's India head Sashi Mukundan said policy and decision making must support raising domestic oil and gas production by adopting best international practices.

New Delhi: Ahead of starting the next wave of gas production from the KG basin, UK-based supermajor BP Plc has pitched for oil and gas producers sharing their infrastructure to help cut costs and monetise small and marginal discoveries. BP, which in partnership with Reliance Industries Ltd is investing $5 billion in developing three sets of discoveries in the Krishna Godavari basin block KG-D6, also wanted sanctity of contracts to be honoured and policy stability.

Speaking at the India Energy Forum of CERAWeek, BP’s India head Sashi Mukundan said policy and decision making must support raising domestic oil and gas production by adopting best international practices. He also made a case for offering incentives for doing better than targeted production rather than imposing penalties. “One of the things that surprised me when I came to India was that you don’t see upstream companies working together and sharing infrastructure,” he said, giving an example of a hub called Nikara that BP and Royal Dutch Shell have created in the Gulf of Mexico.

The hub, 140 miles offshore in 2000 meters of water depth, brings in oil and gas production from 8 fields – four owned by Shell and BP and the remaining by other operators. There are 100 miles of gathering line and four export lines – two oil pipelines built and operated by Shell and two gas pipelines that are built and operated by BP. But production from all 8 come through that system, he said. “If you have something like that you actually can speed up new production, you can reduce the cost, you can bring up marginal discoveries. Also, you can bring down the economic cut off point of production from each of these fields,” he added.

The KG-D6 block sits next to the gas blocks of state-owned Oil and Natural Gas Corp (ONGC). Reliance-BP has built pipelines to carry the gas to share and so has ONGC laid separate lines. Mukundan said there should also be the sanctity of contract and policy stability. “Once we come and invest under a certain contract and a certain policy framework, it is important that we keep it the same and continue with that,” he said, adding the present government is pushing for that.

The other thing is interpreting contracts to support activities, he said.

“Proof is in the pudding, which is why BP and Reliance have committed to spend $5 billion to develop three fields which will produce 30 million standard cubic meters per day or roughly 1 billion cubic feet per day of production. That will meet 15 per cent of India’s demand in 2022-23 and be roughly about 25 per cent of the production.”