BP Plc writes to Oil Minister on KG-D6 nod

With bureaucratic hurdles delaying its plans to boost output from flagging KG-D6 block, UK's BP Plc CEO Bob Dudley has written to Oil Minister S Jaipal Reddy seeking immediate approvals so as that the block's potential can be fully exploited.

BP, which recently bought 30% stake in KG-D6 and 20 other blocks of Reliance Industries for Rs 38,295 crore ($7.2 billion), is keen to undertake sea-bed surveys this winter season -- the only four months weather window available in Bay of Bengal for such jobs, to acess potential of satellite discoveries in the block and draw blue-print of their development.

Following up his meeting with Reddy on the sidelines of the World Petroleum Congress in Doha last month, Dudley said one full year may be lost if approvals do not come in time.

"As I said during our meeting in Doha, I am deeply concerned that unless we get approvals and permits to begin these sea-bed surveys this December, we will lose a year in our goal of bringing  materially new amounts of gas to the Indian market," he wrote to Reddy last month.

RIL's Rs 8,130 crore ($1.529 billion) plan to develop four satellite fields surrounding the currently producing D1&D3 fields in KG-D6 block is awaiting oil ministry nod. The survey is part of the development plan.

The satellite fields are key to boosting output from the block which has fallen over 35% to around 39 million cubic meters per day over past one-and-half-years.

"Upon my return, I had my team re-visit the PSC and they advise me that it is their firm view that these sea-bed survey activities are covered by Article 10.7 of the KG-D6 Production Sharing Contract (PSC) as necessary and sound 'Petroleum Operations' for a field development plan," Dudley wrote.

RIL and BP have been nudging the ministry to approve Rs 388 crore ($73 million) cost of undertaking pre-engineering works including sub-sea survey on the satellite fields. Of this Rs 160 crore ($30 million) is the cost attached to the four satellite fields whose development plan is pending approval with the oil ministry.

The two companies have proposed that this pre-development cost can be included in the final field development plan that they will come up with later.

"Furthermore, such costs are cost recoverable Petroleum Operations under article 3.3 of the PSC Accounting Procedures," Dudley said.

"I look forward to your support in this matter so that we can start immediate work in the KG-D6 block which will help increase Indian gas production," he added. "We stand ready to work with all those concerned so that we may get to work now to fully exploit and develop the potential of the KG-D6 block."