British Petroleum's application for retailing jet fuel rejected

The government has rejected British oil major BP's application for selling aviation turbine fuel (ATF) to airlines because the company's investment does not qualify it for a retailing licence, Petroleum Minister Dharmendra Pradhan said on Wednesday.

"To get marketing rights for transportation fuels, namely, Motor Spirit (MS), High Speed Diesel (HSD) and Aviation Turbine Fuel (ATF), applicants must meet the requirements that inter alia include investment or proposed investment of Rs.2,000 crore in exploration or production, refining, pipelines or terminals," Pradhan told the Rajya Sabha in a written reply.

"With reference to this application dated June 11, 2014, the directorate general of hydrocarbons has reported that BP's share of expenditure was $508 million between 2011-12 and 2013-14 of which the capital expenditure component and operational expenditure component is $171 million and $337 million, respectively."

"This did not meet the joint requirements of Clause 3(I) and 3(IV) of the Marketing Resolution dated March 8, 2002 and thus the application was rejected," he added.

BP Exploration (Alpha) Ltd., a wholly-owned subsidiary of BP, had submitted an application for authorisation to market ATF, or jet fuel, claiming to have invested $477 million in India.

Pradhan said that of the $477 million invested in India, $259 million was said to be capital investment and another $2.3 billion was proposed to be further invested.

BP's $7.2 billion spent in buying 30 percent stake in 21 exploration blocks of Reliance Industries in the eastern offshore is not being considered as capital investment.

To qualify for a fuel retailing licence as per the 2002 fuel retailing guidelines, a company should have made capital investment of Rs.2,000 crore, or $500 million.

The petroleum ministry had written to BP in March that it could apply afresh, detailing future investments to qualify for an ATF licence.