Mukesh Ambani, BP head meet PM on gas pricing

Both firms feel that an interim arrangement being considered by the government is inadequate

Europe's second biggest oil firm BP Plc's head, Bob Dudley, and his partner, Reliance Industries Chairman Mukesh Ambani, on Monday asked the government to lay a clear roadmap for market driven pricing of natural gas, as the current sub-market rates were not drawing big investments.

On his second visit to India in as many months, Dudley and Ambani, met Prime Minister Manmohan Singh and senior government functionaries to brief them about their investment plans and to seek clarity on regulatory issues.

The duo also met Planning Commission Deputy Chairman Montek Singh Ahluwalia and had sought a meeting with Law Minister Ashwini Kumar, two key members of a ministerial panel on gas pricing and allocation.

Dudley, who made a day-long stop here on the way to Shanghai, pressed for clarity on pricing of natural gas that will be implemented upon expiry of the $4.2-per million British thermal unit rate a year from now.

"They are very concerned, they are very keen that government take a view (soon). That process is underway. I wasn't able to tell him what we are going to decide," Ahluwalia told reporters here. "I did say that there is an empowered group of ministers and it will be considering the C Rangarajan committee (recommendation)."

Dudley, who also met Oil Secretary Vivek Rae, briefed the Prime Minister and others about the investments BP along with RIL plans to make in quickly putting satellite gas fields in the flagging KG-D6 block, as also bringing discoveries in eastern offshore NEC-25 block to production. "We are the largest investor in India. We have come to review progress of plans," he said, adding that BP was "very pleased" with the events that allowed the firm to drill an exploration well on the currently producing fields in KG-D6 block well after the expiry of exploration phase. Dudley said there may be "promising indications of resources" in the well drilled 2 km below the currently producing Dhirubhai-1 & 3 fields and BP-RIL were also "discussing plans for R-Series satellite development."

BP-RIL want the government to spell out a clear roadmap for migrating to market determined gas pricing in the next 3-5 years so as to provide clarity to producers to make investment decisions.      Dudley's BP and Ambani's RIL hold that the C Rangarajan Committee recommendation of doubling domestic natural gas price to $8-8.5 per mmBtu will be inadequate for bringing high risk deepsea discoveries to production.

A panel headed by C Rangarajan, Chairman of the Economic Advisory Council to the Prime Minister, observed that the current price for domestic gas was out of sync with global rates and suggested an interim "hybrid producer price" derived by averaging international hub prices with cost of imported liquid gas (LNG) for next five years.