BP PLC said Thursday it is pushing ahead with long-delayed efforts to develop natural gas offshore India in a $6 billion investment with India's Reliance Industries Limited.
The companies are expecting to produce 425 million cubic feet of gas a day from deep water gas fields roughly 70 kilometers off India's east coast by 2020, in the first of three projects they plan to develop with the funds. Between 2020 and 2022 they're expecting to add another 1 billion cubic feet a day of new gas production, assuming the other two projects are approved by the government.
BP first partnered with RIL in 2011, spending $7.2 billion for a 30% stake in oil and gas fields operated by the Indian company. The deal was the company's first major investment since its fatal blowout in the Gulf of Mexico in 2010, and came at a time when BP was desperately selling assets elsewhere to help pay for the fallout from the spill.
It was meant to mark a step toward new growth prospects in a market where demand for oil and gas was growing rapidly, but for years government caps on gas prices limited profitability and stymied investment.
"It's taken a while to develop a natural gas price to help develop these projects," BP Chief Executive Bob Dudley told the industry CERAWeek conference in Houston in March. "It is behind in developing these resources."
But recent reforms to encourage development of India's natural resources, have helped to remove uncertainty over the gas price energy companies can hope to achieve for new production.
Now, the British oil giant seems ready to pile in again, hoping to take advantage of India's rapidly growing market. The country already consumes over 5 billion cubic feet of natural gas a day, according to BP. It hopes to double that number by 2022.
Though weak oil and gas prices have pressured spending across the industry and delayed new projects, BP has made it clear that it is back in growth mode after years of retrenchment. In addition to its latest investment in India, the company intends to add 800,000 barrels a day of new production by the end of the decade and has ambitious plans to increase profit from its refining and marketing arm.
In addition to their plans to boost gas production, BP and RIL also said Thursday they would look for other opportunities in India in conventional fuel retail as well as lower carbon alternatives.
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(END) Dow Jones Newswires
June 15, 2017 10:29 ET (14:29 GMT)