Delay in gas price hike frustrating, says BP

BP's $7.2 bn investment in 2011 is the largest foreign investment in the energy sector in India

BP Plc, Europe’s second-largest oil company, on Thursday said the delay in implementation of an increase in the price of natural gas was holding back investments; it was frustrating.

BP, whose $7.2-billion investment in 2011 is the largest foreign investment in India’s energy sector, has lined up projects that will reverse the sinking natural gas production from KG-D6 fields. The investment, however, is unviable at the current rate of $4.2 an mBtu.

“We are ready to go ahead with our first project, probably a $4-billion one. We are getting ready to move it forward (but) are awaiting the gas price decision. That is frustrating because it was decided last June,” said Sashi Mukundan, regional president & India head, BP. He was speaking at the Economist India Summit.

He, however, added: “We are here for the long term, as our business is such that it goes in decades. So, we recognise we need to sit, wait and see what happens.”

Mukundan said India was importing oil & gas, even as it had the resources under the ground. About $180 billion of imports were coming in and this might grow to $200-300 billion. He also said the prime minister should set up an energy advisory board where he could hear about international experiences.