The companies will award nearly USD 6 billion contracts to develop dry gas projects in KG D6 basin.
Reliance Industries and BP today announced plans to jointly make a fresh investment of USD 6 billion (approximately Rs 40,000 crore) over 3-5 years to develop three gas projects in KG-D6 block of Krishna Godavari basin.
The two companies would also jointly explore opportunities in the entire energy value chain including fuel retailing and renewables with support from the vast technology and telecom infrastructure that the Mukesh Ambani group has set up.
Ambani and BP Group Chief Executive Bob Dudley addressed a press conference today in Delhi to make the announcement. Earlier in the day, they met Prime Minister Narendra Modi and Minister of State (independent charge) for Petroleum and Natural Gas Dharmendra Pradhan.
“We are quite enthused with present investment proposal we have and that we are all set to bring the true potential of KG-D6 to India and the people of India. It is high time we produced our own gas and not import it when we have our own,” Ambani said in reply to a media query.
Development of the three projects is expected to ultimately bring in 30-35 million cubic metres (1 billion cubic feet) of gas by the time all come to fruition in 2022.
The first project is the ‘R-series’ deepwater gas field in Block KGD6 off the east coast of India. The project (D34) is a dry gas development one in water-depths of more than 2,000 metres, approximately 70 kilometres offshore. The project is expected to produce up to 12 million cubic metres (425 million cubic feet) of gas a day, coming onstream in 2020.
A joint press release by RIL and BP said the two companies planned to submit development plans for the next two projects — Satellites and D55 — for government approval before the end of this year. The implementation of these two projects will be subject to government approval.
Gas produced over the life of these three new projects could generate up to USD 20 billion in import substitution (at current imported LNG prices) and employment of up to 20,000 skilled labour during the construction period over the next 5 years.
RIL, BP and Canada’s Niko Resources have a 60:30:10 joint venture that owns and operates multiple oil and gas blocks in India, including the producing block KGD6.
The two companies, since the beginning of their alliance in 2011, have so far invested Rs. 10,000 crore in deepwater exploration and production.
India today consumes over 5 billion cubic feet a day of natural gas and aims to double gas consumption by 2022. Gas production from the integrated development is expected to help reduce India’s import dependence and amount to over 10 percent of the country’s projected gas demand in 2022.
While no details were given, both Dudley and Ambani said the strategic partnership announced between the two covered downstream activities and fuel retailing.
“So what we have announced today is a strategic partnership that goes into the downstream as well as marketing. So you would not expect to see BP doing these alone or on our own. We would like to work with Reliance and that’s part of the announcement today,” Dudley said.
The companies will also evaluate opportunities in trading that could optimize the value of existing products like oil, gas, fuels, LNG, power and carbon. They will also look at working together on carbon emissions trading, and share knowledge around technology and management practices.
“Under this new cooperation our two companies will jointly explore options to develop differentiated fuels, mobility and advanced low carbon energy businesses in India. We expect to collaborate, in addition to the conventional fuels and aviation marketing, on unconventional mobility solutions, addressing electrification, digitization and disruptive mobility trends,” Ambani said. “Together, these collaborations will seek to address the mobility needs of urban, rural/farm, industrial/commercial, and highway consumers in India, applying the leading capabilities of both BP and Reliance.”
He said the companies will explore opportunities in both conventional and unconventional fuels with the whole objective being to not do what was “old world”. He said low carbon and renewable energy was very much on the company’s drawing board.