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Q&A: Bob Dudley, BP Plc

'By 2014, we should be able to get KG-D6 output back up'

Business Standard 

Bob Dudley

Bob Dudley, group chief executive of BP Plc, talks to NDTV’s Vikram Chandra on his partnership with Reliance Industries, regulatory hurdles and falling gas production from the D6 block in the Edited excerpts:

How are things looking to you here, just after you have done perhaps the biggest overseas deal in Indian history?
It’s a big investment for BP. It’s a great strategic partnership with Reliance that takes the great skills they have in project engineering in the Indian market with some of BP's great sub-surface exploration skills.

A lot of people are curious as to what is actually happening out there in D6.
D6 is a world-class resource. But as always, when you get into oil fields and gas fields, you are trying to image down miles under the sea. You get in and you find some surprises. The field has declined; our teams and the Reliance teams are working at that. It is like a coke can of a reservoir. People are advocating we put more straws in it. What is around are a few other coke cans. What we need to do is develop the satellite fields. We have to be able to bring it and use the infrastructure. We're hopeful the government will approve the development of the satellites. That's how we can bring the production back up.

To do that, pricing becomes important. I've seen a report that some of those satellites may not necessarily be viable.

We’re getting in and looking at the economics. It is deep water, lots of technology, high risk. I am hopeful of our finding a way to make those economic. The priority for us, in working with Reliance, is to get the gas production back up. It takes a couple of years to get these on. If we can get these satellites going, it will restore this.

Are you confident it would get back to the levels it should be?
I am. I believe it would take till around 2014 to get these other structures developed and tie it back in to the infrastructure. Oil and gas is a very long-term, risky investment. We can see the resources out there; they’re just in a little bit different spot than we thought. So, we tie it together and I believe by 2014, we will be back up.

The other part of partnership is to look at downstream ventures, terminals. Potentially, this is a $20-billion deal and not a $7-bn one. Are you fairly confident about the other aspects of this deal as well?
We will look at infrastructure. We may look at LNG. When you look at the energy demands of India over the next 20 years, it’s striking. It will grow in all forms. Gas is a very clean burning fuel. It has half the emissions and the same energy content as, say, coal. So, getting the gas business going in India, which includes domestic gas as well as finding sources to import, feels like a good policy.

How significant is the price differential between domestic gas and LNG?
Very significant, right now. The gas price in India is $4-6 and you can import LNG for $16. What you want to do is to encourage the domestic gas market.

You say the government should think carefully about the price of RIL gas, now $4.2?
We are just getting started in the projects. So, we are very enthusiastic. Our number one focus is to try and get the production back up from D6. In the longer term, whether it’s ONGC or the Reliance-BP alliance, offshore is expensive, risky. There has to be a structure there that encourages taking that risk for the development.

You are no stranger to regulatory problems. Your partner, Reliance, has been facing a CAG enquiry and questions about bloat in capital costs. Is it worrying you?
I’ve read Reliance's comments. And, some of the government’s comments on it. Globally, because of the nature of oil and gas developments, you are never sure what a reservoir would look like or the cost of the project based on the commodity price cycle. I haven’t seen anything that seems unusual to me, in terms of big developments, but I’m not an expert on the report.

Other than Reliance, is there anything else you would like to do in India? We keep hearing you are talking to IOC about petrochemical plants and other activities.
We have a very big business here. Castrol is owned by BP. And, we are doing a great deal of work in Bangalore for engineering services. India is a very important country for BP.

First Published: Thu, September 29 2011. 00:49 IST