The government has amended the KG-D6 contract to formally induct British energy giant BP as 30% partner in India's biggest gas field operated by Reliance Industries, government officials said. With this BP gets a legal role in the management of India's giant gas block in the eastern coast, government and industry officials said.
"The government allowed BP's entry in the production sharing contract of D6 block only, and is processing amendments in other 20 PSCs," one official said requesting anonymity.
The British firm has been waiting for formal signing of contracts since August 2011 when the government approved its $7.2-billion deal to acquire 30% stake in 21 blocks held by RIL. Reliance and BP had announced the deal in February last year for 23 blocks but the government did not approve their partnership in two blocks due to technical reasons.
BP and RIL spokesmen did not respond to queries. An oil ministry spokesman did not comment.
ET wrote first on January 5 that the Directorate General of Hydrocarbons (DGH) had given a clean chit to the global energy major on financial obligations in 21 blocks and the government would soon sign amended contracts with BP.
The DGH expedited the matter after BP India head Sashi Mukundan had written a letter to Oil Minister Jaipal Reddy on November 29, seeking a quick decision. "The PSC amendment, which is a formality in light of the government of India approval (in August 8), is yet to be completed. The PSC approval delay, in turn, has unfortunately created issues with normal PSC management processes," he said in the letter last month.
"The government will soon complete amendment of production sharing contract (PSC) as the DGH has conceded that no bank guarantee is required to be submitted by BP for the D6 block," a government official said requesting anonymity.
Earlier, the DGH had blocked formal inclusion of BP as 30% partner of RIL in the D6 block saying that the company had not furnished a bank guarantee. BP had, however, contested this saying guarantees were needed for exploration blocks and the D6 block was past the exploration phase.
The DGH later clarified that as per article 29.3 (a) of the PSC, the contractor was required to furnish bank guarantee with respect to work programme to be undertaken for the following year of the exploration phase. But in this case, exploration phase was over three years go, officials said.
The formal inclusion of BP in the D6 PSC was also delayed by almost four months due to some minor corrections in the draft contract, officials said.
The Cabinet Committee on Economic Affairs had cleared BP's proposal to pick up 30% stake in 21 blocks held by RIL on July 26 last year. Subsequently, the oil ministry formally conveyed the government's approval to BP on August 8. The approval was subject to certain conditions such as financial and performance guarantees with respect to individual PSCs. Officials said BP Exploration ( Alpha) Ltd had furnished performance guarantee of its parent company.
"The government allowed BP's entry in the production sharing contract of D6 block only, and is processing amendments in other 20 PSCs," one official said requesting anonymity.
The British firm has been waiting for formal signing of contracts since August 2011 when the government approved its $7.2-billion deal to acquire 30% stake in 21 blocks held by RIL. Reliance and BP had announced the deal in February last year for 23 blocks but the government did not approve their partnership in two blocks due to technical reasons.
BP and RIL spokesmen did not respond to queries. An oil ministry spokesman did not comment.
ET wrote first on January 5 that the Directorate General of Hydrocarbons (DGH) had given a clean chit to the global energy major on financial obligations in 21 blocks and the government would soon sign amended contracts with BP.
The DGH expedited the matter after BP India head Sashi Mukundan had written a letter to Oil Minister Jaipal Reddy on November 29, seeking a quick decision. "The PSC amendment, which is a formality in light of the government of India approval (in August 8), is yet to be completed. The PSC approval delay, in turn, has unfortunately created issues with normal PSC management processes," he said in the letter last month.
"The government will soon complete amendment of production sharing contract (PSC) as the DGH has conceded that no bank guarantee is required to be submitted by BP for the D6 block," a government official said requesting anonymity.
Earlier, the DGH had blocked formal inclusion of BP as 30% partner of RIL in the D6 block saying that the company had not furnished a bank guarantee. BP had, however, contested this saying guarantees were needed for exploration blocks and the D6 block was past the exploration phase.
The DGH later clarified that as per article 29.3 (a) of the PSC, the contractor was required to furnish bank guarantee with respect to work programme to be undertaken for the following year of the exploration phase. But in this case, exploration phase was over three years go, officials said.
The formal inclusion of BP in the D6 PSC was also delayed by almost four months due to some minor corrections in the draft contract, officials said.
The Cabinet Committee on Economic Affairs had cleared BP's proposal to pick up 30% stake in 21 blocks held by RIL on July 26 last year. Subsequently, the oil ministry formally conveyed the government's approval to BP on August 8. The approval was subject to certain conditions such as financial and performance guarantees with respect to individual PSCs. Officials said BP Exploration ( Alpha) Ltd had furnished performance guarantee of its parent company.
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