MUMBAI/LONDON
RELIANCE Industries and UK partner BP plan joint investment of more than $5 billion over the next three to five years to boost declining output at a key natural gasfield off India’s east coast.
The D6 block in the Krishna Godavari basin was expected to contribute up to a quarter of the gas supply for Asia’s third-largest economy and help to reduce expensive liquefied natural gas (LNG) imports.
However, output from the field has been declining, putting the company under pressure from the government and regulators to increase production, even as it has pushed the government to increase the price it can charge for gas.
The two companies now plan to invest in a series of measures to develop about 4 trillion cubic feet of discovered natural gas from the block, Reliance said in a statement on Tuesday.
Reliance holds a 60 percent stake in the D6 block, while BP has a 30 percent share that it obtained in a $7.2 billion deal in 2011. The remainder is held by Canada’s Niko Resources.
By the end of 2012 fields in the D6 block had produced 2 trillion cubic feet of gas, according to Reliance, which is controlled by India’s richest man, Mukesh Ambani. In November Reliance cut its estimate of gas reserves in the block by about two thirds to 3.4 trillion cubic feet.
BP and Reliance said on Tuesday that they would accelerate the pace of exploration and development as soon as approvals are received. The companies have invested $5.5 billion in the field. A second planned investment of $3.3 billion was scrapped last year because of declining in production at some blocks in the field.
Meanwhile, BP on Tuesday vowed to “vigorously defend” itself in court next week over US government claims for “excessive” fines linked to the 2010 Gulf of Mexico oil spill disaster.
“BP will vigorously defend against gross negligence allegations,” the energy giant said ahead of the start of a federal civil trial on Monday.
BP returns to the Louisiana courthouse on February 25 for a mammoth trial consolidating scores of remaining lawsuits stemming from the worst environmental disaster to strike the United States.
The energy major must also still resolve a civil case on environmental fines which could amount to as much as $21 billion if gross negligence is found. It also remains on the hook for billions in economic damages, including the cost of environmental rehabilitation.
“We have always been open to settlements on reasonable terms, failing which we have always been prepared to defend our case at trial,” said Rupert Bondy, Group General Counsel at BP, in a company statement.
“Faced with demands that are excessive and not based on reality or the merits of the case, we are going to trial.
“We have confidence in our case and in the legal team representing the company and defending our interests.” The group on Tuesday added that it believed the official US government estimate of 4.9 million barrels of oil spilled into the sea was “overstated” by at least 20 percent.
“BP believes that a figure of 3.1 million barrels should be the uppermost limit of the number of barrels spilled that should be used in calculating a Clean Water Act penalty,” it said. The blast on the BPleased Deepwater Horizon drilling rig on April 20, 2010 killed 11 people and unleashed millions of barrels of oil into the Gulf, blackening beaches in five states, and crippling tourism and fishing industries.
Last month, a US judge approved a $4.5-billion deal in which BP pleaded guilty to criminal charges from the devastating spill.
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