UK's BP asks govt to compensate for the surrendered KG basin block

Posted By: Religare
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UK-based energy major BP plc has requested the government to compensate for a Krishna Godavari basin block, which the company was forced to surrender as restrictions imposed by the Defence Ministry made it impossible to explore oil & gas.

In the year 2008, BP along with Mukesh Ambani's Reliance Industries Ltd (RIL) had won the deep-sea KG-D17 block in the seventh round of auction under New Exploration Licencing Policy (NELP).

However, around 70 per cent of the 1,949 square kilometer of the block comes under DRDO and Navy exercises areas, where oil and gas operations are not possible.

In a letter to the Petroleum Ministry, BP, Vice President (Exploration), Alistair J A Brent wrote, "We would therefore be prepared to relinquish the KG—DWN—2005/2 (KG—D17) block, but are happy to discuss possible options in lieu of such relinquishment."

He added that the contractors (RIL-BP) will not be able to carry out any further exploration operations as such activities will be required to be managed with respect to Naval and DRDO testing and exercises.

"Even if any hydrocarbons are discovered, those cannot be produced as contractors (RIL—BP) would be prohibited from installing any permanent infrastructure in support of petroleum operation," the letter specified.

It further stated that the restrictions will refrain the company to achieve minimum work commitment it had given at the time of winning the block. The company had committed to do 2D and 3D seismic survey of the entire block.

However, we are willing to consider an option to carry out a similar level of activities if equivalent new acreage is given in a mutually agreed area for exploration," Bent wrote.

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