Mukundan welcomed the new gas price regime, and said BP would contribute 30 percent and Niiko Resources 10 percent towards the bank guarantee RIL has to submit to avail of the new gas price from April 1, 2014. The global giant has deciding to give shale gas a skip in India, and is looking at LNG and petchem as future engines of growth. He further added that RIL , BP are likely to invest USD 10 billion in KGD6 by 2020.
It's considering an equity participation in Mundra and a USD 1 billion investment for a 50:50 joint venture with state-run Indian Oil to set up one of the world's largest acetic acid facilities in Vadodra.
Also Read: EGoM okays IOC share sale to ONGC, OIL for Rs 4,800-5,000cr
Below is the edited transcript of Sashi Mukundan interview on CNBC-TV18
Q: Will the new gas price regime step up investments and increase gas production?
A: This gas price notification is a step in the right direction -- getting towards the arms length market-determined pricing. The intent is clear, with the government trying to bring this to a market pricing. What we understand, there is also a committee that the ministry has put which will look at the transition. Here the transition is in terms of what is the market price, what are the modalities in terms of when and how this transition would happen. Clearly, this is the good thing because as we get closer towards the market price it helps in companies stepping up, taking more risks, doing more activity in this area. And what we really need in this country is more activity.
Q: Suddenly the new gas price regime a lot more fields, lot more areas within your existing fields will become more viable. Can you give me an idea of how much more gas you can produce or how much more you would be willing to invest?
A: At the end of 2013 we were producing around 11 mmscmd of gas. With just the interventions that we are doing right now with the field, also the fact that we had an oilfield which is producing most of its oil and now we are getting ready to blow down the gas in that. When you take all of this together by the end of this year before we start putting in the compression we hope to at least increase the production by another 50 percent.
Our project plans continue, which will start coming in 2018 and beyond. Our series will come up somewhere between 10 and 15 mmscmd a day, satellites and so forth. Like I have said in the past, essentially if we stick to our programme, do what we said we would do, get all the right support and approvals from the government then we hope to quadruple our production by 2020.
Q: You said you might be able to increase production by 50 percent by the end of this year. Are you talking about March 31 of 2014 the Indian financial year or do you mean the BP calendar year, end December 2014?
A: It is the calendar year. It is by the end of 2014.
Q: By the end of 2014 you are hoping to have about 15-16 mmscmd from the KG-D6?
A: Yes something around that level. Plus or minus of 15 mmscmd.
Q: Can you give me an idea on the kind of investments that you have been making to hike this gas production?
A: Lot of things that people don't understand is that D6, as we have always said, continues to be a critical block. There is a lot of activity going on. There is a lot of production coming out of it. If we do all the projects that we do right now in D6, you could see us spend close to USD 10 billion.
Q: By when would you be able to invest that USD 10 billion?
A; Over this decade, that is when I talk about 2020. So, between now and 2020.
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