RIL, BP can sell natural gas from KG Basin to its affiliates: Bob Dudley

NEW DELHI: The joint venture of Reliance Industries and BP can sell natural gas from its KG deep sea project to its affiliates without violating the terms of its production sharing contract with the government, BP group chief executive Bob Dudley has said.

RIL-BP’s $5-billion deep sea project in the KG Basin is set to begin producing from May next year. The auction of 5 million standard cubic metres per day of natural gas they plan to produce from the R-Cluster Field in KG-D6 block, set for last week, has been delayed by a month. RIL-BP might be able to sell the gas in open market to their customers as well as to “our own companies,” Dudley said.

On whether the arm’s length sale provision in the contract allows such sale to affiliate, Dudley said: “Yes, we should be able to participate.”


RIL-BP have hired CRISIL Risk and Infrastructure Solutions Ltd to manage the bidding process and evaluate the bids, which must be submitted electronically.

Another company executive said nothing in the contract bars affiliates from participating in the sale process as long as the auction is managed by a third party.

Reliance had set off a controversy two years ago after it participated and outbid all rivals to win all the gas on offer from its coal bed methane (CBM) project. The oil ministry found the sale a violation of contract and of the official CBM policy but Reliance maintained that the sale of its CBM to itself was perfectly legal.

RIL and BP, which are jointly developing three fields named R-Cluster, Satellites and MJ in KG basin, expect to produce 1 billion cubic feet a day when fully developed in 2022.