OREANDA-NEWS. February 25, 2011. BP-Reliance Industries Ltd (RIL) is exploring the option of importing LNG (liquefied natural gas) BP, which has gas sources in Australia, Trinidad and Tobago, Egypt, and Indonesia, has supplied Petronet LNG from its global portfolio.

The hydrocarbons majors BP and RIL — which recently set up a 50:50 joint venture for sourcing, distributing and marketing gas in India — may look at the availability of capacities at the existing LNG terminals to bring gas.

“We could look at the existing terminals for potential capacity,” Mr Sashi K Mukundan, Country Head, India, BP Group Companies, told Business Line. At present, gas is imported at two LNG re-gasification terminals — Dahej of Petronet LNG and Hazira of Hazira LNG Pvt Ltd.

New capacity

RIL-BP expects to complete the formalities for setting up the joint venture in 3-6 months, he said, adding that alongside “marketing the existing gas, we have the option to import LNG to either sell directly or to pool with the domestic gas and use it to broaden our markets.”

The current supply of natural gas, including imported gas (LNG), is around 177 million standard cubic metres per day (mscmd) and the estimated demand is 225 mscmd. RIL-operated D6 block currently produces around 54 mscmd of natural gas.

On the addition of new capacity, Mr Mukundan said, “The joint venture will seek to invest in or take capacity positions in pipelines and LNG terminals to develop markets” and ensure that the gas produced or imported is monetised in a timely manner.

Pricing factors

Asked whether BP had invested in India's gas segment in the hope that regulatory controls will be lifted in the near future, Mr Mukundan said, “We view it differently. The trend is changing. The market is willing to accept higher gas prices. Even in the context of D6 pricing, the price was determined by the contractor and submitted to the Government, which approved the formula.

“In fact, the price of gas sold under administered price mechanism has also been increased to USD 4.20/mmBtu. Today, the customer in India is paying different prices depending on the source of the gas,” he pointed out.