New Delhi : After the oil ministry’s tough talk, BP of the UK has signalled its desire to end arbitration seeking higher prices for natural gas from eastern offshore KG-D6 block that it co-owns with Reliance Industries.
The Cabinet on Thursday allowed market prices for undeveloped gas discoveries in difficult areas subject to a cap. But this higher rate will not apply to areas where their operators have either filed legal suits or arbitration over gas pricing.
Asked for comments, BP India spokesperson told PTI, “The recent decision by the government on marketing including pricing freedom for new production from deep, ultra-deep water and high-pressure, high-temperature areas provides clarity to end the pending gas pricing dispute.”
RIL, BP and their partner Canada’s Niko Resources had in May 2014 filed an arbitration seeking implementation of higher gas prices for the flagging KG-D6 block.
The Thursday’s Cabinet decision that allows operators to charge up to USD 7.08 per million British thermal unit (mmBtu) as against the current USD 3.82 per mmBtu will be applicable to new gas production and not existing output from fields like Dhirubhai-1 and 3 and MA in KG-D6 block.
It will also be applicable for 1.4 trillion cubic feet MJ-1 discovery in KG-D6 block. But that can happen only when arbitration and litigation directly on gas price are concluded or withdrawn. “BP and its partners will now focus on working closely with the government to develop resources and bring additional natural gas to market,” the spokesperson said.
