BP Forges Ahead With Deepwater Gas Field Plans in India -- Update
June 15 2017 - 11:33AM
Dow Jones News
By Sarah Kent
LONDON-- BP PLC said Thursday it is pushing ahead with
long-delayed efforts to develop natural gas offshore India,
partnering with Reliance Industries Ltd. to plow $6 billion more
into the first big investment it made following the Deepwater
Horizon disaster.
BP and Reliance, one of India's biggest energy companies, are
expecting to produce 425 million cubic feet of gas a day from deep
water gas fields roughly 70 kilometers off India's east coast by
2020, in the first of three projects they plan to develop with the
funds. Between 2020 and 2022 they are expecting to add another 1
billion cubic feet a day of new gas production, assuming the other
two projects are approved by the government.
BP first partnered with RIL in 2011, spending $7.2 billion for a
30% stake in oil and gas fields operated by the Indian company. The
deal was the company's first major investment since its fatal
blowout in the Gulf of Mexico in 2010, and came at a time when BP
was desperately selling assets elsewhere to help pay for the
fallout from the spill.
It was meant to mark a step toward new growth prospects in a
market where demand for oil and gas was growing rapidly, but for
years government caps on gas prices limited profitability and
stymied investment.
"It's taken a while to develop a natural gas price to help
develop these projects," BP CEO Bob Dudley told the industry
CERAWeek conference in Houston in March. "It is behind in
developing these resources," he said of India.
The Indian government last year unveiled a new formula for gas
prices from deepwater projects that Mr. Dudley said provided more
certainty.
"I'm feeling optimistic about sizable investment in India," Mr.
Dudley said.
Now, the British oil giant seems ready to pile in again, hoping
to take advantage of India's rapidly growing market. The country
already consumes over 5 billion cubic feet of natural gas a day,
according to BP. That is a number that it hopes to double by
2022.
Though weak oil and gas prices have pressured spending across
the industry and delayed new projects, BP has made it clear that it
is back in growth mode after years of retrenchment. In addition to
its latest investment in India, the company intends to add 800,000
barrels a day of new production by the end of the decade and has
ambitious plans to increase profit from its refining and marketing
arm.
In addition to their plans to boost gas production, BP and RIL
also said Thursday they would look for other opportunities in India
in conventional fuel retail as well as lower carbon
alternatives.
Write to Sarah Kent at sarah.kent@wsj.com
(END) Dow Jones Newswires
June 15, 2017 11:18 ET (15:18 GMT)
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