BP: $8-8.50/mmBtu inadequate for deepsea gas find

New Delhi (PTI): UK's BP plc has said Rangarajan Committee recommendation of doubling domestic natural gas price to $8-8.5 per mmBtu will be inadequate for bringing high risk deepsea discoveries to production. In a letter to Pulok Chatterji, Principal Secretary to the Prime Minister, the Europe's second biggest oil firm asked the government to spell out a clear roadmap for migrating to market determined gas pricing in the next 3-5 years so as to provide clarity to producers to make investment decisions. BP India head Sashi Mukundan in a letter said the panel headed by C Rangarajan, Chairman Economic Advisory Council to the Prime Minister, recognised that the current price for domestic gas was out of sync with global rates. The price as per this formula comes to $8-8.5 per million British thermal unit as opposed to $4.2 per mmBtu that BP and its partner RIL get for gas from eastern offshore KG-D6 fields. "The price determined through the Committee's recommended formula is at a 40-50 per cent discount to the existing free market price of imported LNG into India," he wrote. At the proposed price, he said, "new production will come only from existing producing fields" but" technically challenged resources and projects in deep water and high risk exploration will be uneconomical to develop and produce." "Most of the discovered deep water/high pressure-high temperature resources (about 10 Trillion cubic feet including 4-5 Tcf with RIL-BP) will not be economically feasible to develop at the resultant price and their lack of development will only exacerbate India's natural gas deficit," he added.