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BP seeks damages for KG block surrender

BP seeks damages for KG block surrender
Highlights

UK's BP plc has asked Petroleum Ministry to compensate for a Krishna-Godavari basin block that it is being forced to surrender after Defence Ministry...

UK's BP plc has asked Petroleum Ministry to compensate for a Krishna-Godavari basin block that it is being forced to surrender after Defence Ministry restrictions made oil and gas exploration impossible. BP along with Reliance Industries had won the deep-sea KG-DWN-2005/2 or KG-D17 block in the seventh round of auction under New Exploration Licencing Policy (NELP) in 2008.

About 70 per cent of the 1,949 square kilometre of the block falls in an area where DRDO and Navy exercises are conducted and has been classified as 'Impact Zone' where oil and gas operations are not possible, BP wrote to the Oil Ministry on May 27.

The block, it said, has "practically become a 'No-Go' Zone for continuous exploration and subsequent development activities thereby preventing contractors from carrying out petroleum operations." BP Vice President (Exploration) Alistair J A Bent wrote that the company appreciated that Ministry of Defence requirements for testing and carrying out exercises have led to the introduction of significant risk and high uncertainly beyond the control of contractors.

"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," BP said. BP had written a similar letter in April. Since the block size is small, flexibility to make any design changes to mitigate the impact of Defence Ministry requirements was severely restricted, it said.

BP said the block was in early stages of exploration and "any further exploration operations will be constrained as they need to be managed with respect to Naval and DRDO testing and exercises."

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