British oil producer BP has completed the full reversal of all its previously booked impairments on the D6 block in the Krishna-Godavari basin (KG-D6), the firm said in its annual report. It is confident of commencing production from the R-Series deepwater gas fields in KG-D6 by 2020.
“In 2017, BP recorded a $30-million impairment reversal and a $56-million reversal of exploration write-offs due to increased confidence in the progress of projects in block KG-D6. This fully reverses all previously booked impairments on the block,” BP said.
BP holds 30 per cent in Reliance Industries’ (RIL’s) KG-D6 block. In 2014, the company stated, it recorded an $810-million charge, comprising a $415 million impairment charge and $395 million exploration write-off, to write down the value ascribed as part of the acquisition of upstream interests from RIL in 2011. The impairment charge rose as a result of uncertainty in the long-term gas price outlook back then, after the introduction of a new formula for Indian gas prices. Some of these impairments were reversed in 2016.
“In the Q4 2016, we recorded a $234-million impairment reversal and a $319-million reversal of exploration write-off relating to KG-D6. This reversal is mainly driven by increased confidence in the progress of projects by BP and its partners,” the firm said in its 2016 report. On the progress of its ongoing investment in the KG-D6 block, BP in its 2017 annual report said, “The project is expected to come on-stream in 2020 and is the first of three planned projects in KG-D6 to be developed in an integrated manner. In October, field development plans for the Satellite Cluster and D55 developments were submitted for requisite approvals.”0