Tech major Lenovo has done it, and so has BT. Now, BP is bringing its board over to India for its first meeting to be held here this week.
Besides taking stock of its India investments, the board is planning an on-site visit to the Krishna-Godavari Basin (KG) D6 block in Andhra Pradesh. They are also likely to meet their partners, including honchos of Reliance Industries.
Bob Dudley, Group Chief Executive, BP, had last month written to Prime Minister Manmohan Singh, saying he had asked the board to hold its May meeting in India. This, he said, was to let board members see the challenges and opportunities that India faces, before they are asked to consider additional investments in the country.
Though the BP team was tight-lipped about the board meeting, citing security reasons, it is understood that the board’s various committees, such as the people, audit and remuneration committees, are likely to meet here. Holding board meetings in countries of investments has become quite common, and BP is just following the trend, say industry observers. Arvind Mahajan, Head of Energy and Renewables, KPMG in India, said, “Global boards these days often hold meetings in key growth markets such as India. BP’s board probably wanted to get a first-hand feel of this key growth market.”
BP’s oil and gas exploration and production business has attracted its own share of debates. In fact, according to international reports, BP had to face shareholder concerns over its $7.2-billion investments as the results were not rosy. In 2011, BP acquired 30 per cent interest in 21 blocks operated by the Mukesh Ambani-led Reliance Industries Ltd, including the KG-D6 block. Since then, 12 blocks have been relinquished, and the contractors are likely to surrender more blocks.
The contractors’ inability to check the declining output from the KG-D6 block also attracted severe public criticism. But the contractors maintain that the decline in output is due to geological reasons. The output has fallen from a peak of 61 mmscmd (million standard cubic metre a day) in 2010 to about 15 mmscmd now.
To top it all, the delay in getting regulatory approvals and uncertainty over gas pricing has also resulted in derailed investment proposals. In his letter to the Prime Minister, Dudley had pointed out that BP was awaiting clarity in the pricing policy of domestic gas to decide on future investments. BP also has a 50:50 joint venture with Reliance Industries, called India Gas Solutions, for sourcing and marketing gas in India.
The joint venture has a non-committal pact with the Gujarat Government for studying locations in the State to set up an LNG (liquefied natural gas) terminal. BP has also evinced interest in acquiring 25 per cent stake in the proposed LNG terminal at Mundra in Gujarat, where Gujarat State Petroleum Corp Ltd holds 50 per cent stake and Adani Enterprises Ltd owns 25 per cent.
The multinational is also sizing up the petrochemicals business here. It has signed licences for use of its proprietary technology by two third parties to scale up Indian plants to global standards.It is also progressing with its joint study with Indian Oil Corporation to invest in a one-million-tonne-a-year acetic acid plant in Gujarat, and recently completed a refinery integration study to optimise the integration benefits of the proposed project with Indian Oil’s refinery.