‘BP would like to start moving fast'

BP marked its big ticket entry into India's hydrocarbons business by striking a partnership with Reliance Industries Ltd (RIL) across the full value chain this week.

In an informal chat with Business Line , Mr Sashi K. Mukundan, Country Head-India, BP Group Companies, shares the company's strategy.

To make the BP-RIL deal effective RIL needs Government approvals for farming out 30 per cent stake in each of the 23 oil and gas blocks…

We are in discussions with our partner, RIL. And in the next couple of days we expect RIL to make applications for seeking mandatory approvals. BP, on its part, would like to start moving fast. The next step is for the partners to sit together and look at the blocks, examining the production sharing contracts for the work programme prescribed and then based on the timeline for each block, decide on where and when to start.

What will be BP's strategy from here onwards in the exploration and production business in India?

With this partnership BP along with RIL has 24 oil and gas blocks in India. BP and RIL had already won a block in the seventh round of NELP; and now with this deal for 23, the total number has gone to 24. It also marks the entry of BP in one of the largest basins (Krishna Godavari) and markets (India). The blocks are spread across the East Coast in Krishna Godavari, Cauvery, and Mahanadi basins stretching till Kerala-Konkan region. There are onshore blocks as well in Assam. We will be working on these.

Will BP help in addressing the decline in D6 production?

We are aware of this. Once we are partners, we would work together to ensure optimising economic resource recovery and production from the field.

D6 is a premium asset among the 23 blocks you are investing in. How much of your valuation is related to this block?

We looked at what was on offer in totality and not just the D6 block. If you remember in 2007 also the data room was opened by RIL but on offer was only D6. Then also we had said that we were clear that we would like a broader canvas. It is in this context that the entire deal has to be looked at.

What are the exit options available, if in the long run any of the partners want to opt out? And does the agreement also envisage any increase in stake by BP in the long term?

At this point it is only 30 per cent in each of the 23 oil and gas blocks. As regards the exit options and other such issues, the joint operator agreements (JOA) inked with the partner clearly lay down all the terms. In fact, to put things straight, while inking the JOAs other stakeholders in some of the blocks – Hardy Oil and Niko Resources – were also brought on board.

Will the deal also see BP getting aggressive in the forthcoming NELP rounds? And is the partnership exclusive?

BP was always aggressive in the NELP rounds. But, we were not going for small acreages. For the NELP rounds prospectivity of the block will be the key criteria for a decision. In future also the two of us (RIL-BP) will be bidding together. The deal clearly spells exclusivity.

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