BP Seeks Additional Incentives From India

BP has asked Indian government for an additional incentive of $1.5 billion for deepsea fields over and above the near doubling of domestic gas price suggested by the Rangarajan Committee, Press Trust of India reported.

Chief Executive of the British firm Bob Dudley wrote a letter to Indian Prime Minister on April 15 seeking clear roadmap to market determined pricing of natural gas saying it will help the country cut its import of liquefied natural gas (LNG), PTI said.

He said the Rangarajan panel suggested pricing model, which would lead to domestic rates going up from $4.2 per million British thermal unit to about $8, would be roughly half way to international prices.

"If the government chooses the mid-way pricing recommendation of the Rangarajan Committee, I respectfully request the government to consider... 'an additional price incentive of $1.5 per mmBtu' for deepsea fields to compensate for high cost and exploration risks," Press Trust of India quoted from Dudley’s letter.

Dudley said the government needs to come out with a schedule of "quarterly increases over the three-year period" to move to an "arms-length market determined price."