BP board to hold meet in India this week

BP plc will hold its maiden board meeting in India this week as the Europe's second-biggest oil firm along with its partner Reliance Industries makes a case for market determined prices for natural gas.

Members of BP board including Chairman Carl-Henric Svanberg and CEO Bob Dudley arrived here today ahead of the board meeting, sources privy to the development said.

The Board will meet partner RIL Chairman Mukesh Ambani and are scheduled to travel to KG-D6 gas fields in Bay of Bengal.

The board will be accompanied by RIL Executive Director P M S Prasad to Kakinada, the landfall point of the KG-D6 gas, as well as the deep-sea fields. It was speculated that Ambani himself may travel with the board to RIL-BP's flagship KG-D6 fields but it could not be confirmed.

Dudley had revealed the impending meeting of BP board in New Delhi in a letter to the Prime Minister Manmohan Singh last month.

"I have asked the BP board of directors to hold their May meeting in India so that the members can see the challenges and opportunities themselves before they are asked to consider additional investments in India," he had written to Prime Minister on April 15. The letter was written soon after his meeting with Singh.

MNCs bringing their boards to hold meetings here is symbolic of their ambitions linked to the country. PepsiCo, Goldman Sachs, Lenovo and Unilever are among those who have previously held board meeting in India.

BP had in 2011 bought 30 per cent stake in 21 oil and gas blocks of RIL including the producing KG-D6 and gas discovery area of NEC-25.

Dudley had last week asked the government to lay a clear road-map for replacing the current sub-market price for natural gas with market determined rates.

He told Prime Minister that the Rangarajan panel suggested pricing model, which would lead to domestic rates going up from USD 4.2 per million British thermal unit to about USD 8, would be roughly half way to international prices.

"If the government chooses the mid-way pricing recommendation of the Rangarajan Committee, I respectfully request the government to consider... 'an additional price incentive of USD 1.5 per mmBtu' for deepsea fields to compensate for high cost and exploration risks," he wrote.

Dudley said the government needs to come out with a schedule of "quarterly increases over the three-year period" to move to an "arms-length market determined price."

"In the Indian context, this is represented by the landed price of LNG," he said, adding that a clear pragmatic market-based policy to move India's gas price to the level of imported LNG will create a dynamic and powerful shift of India's industry.