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LONDON (Alliance News) - BP PLC, Niko Resources Ltd and Reliance Industries Ltd together announced on Saturday that they issued on Friday a notice of arbitration to the Indian government over gas prices.
The firms had won the approval in 2013 to nearly double their prices at the Indian natural gas field KG-D6, which they jointly operate, but the companies continued to see delays by the government in putting the changes in place, after implementation of the approval was deferred by India's election watchdog ahead of the ongoing general elections.
The three firms said that, without knowledge of the specific price plan, they are unable to sanction planned investments of up to USD4 billion so far in 2014, and that they hope to work with the government to achieve a swift and efficient resolution to the problem.
"In addition, this will also delay the ability of the parties to appraise and develop other significant discoveries made last year," they said in a joint statement.
The firms said they were planning to invest USD8 billion to USD10 billion in the next few years to improve production at the KG-D6 block, which will play a significant part in meeting India's energy needs.
The KG-D6 discovery was considered India's largest oil find in 2002 and started gas production in 2009.
A new gas pricing mechanism in India was debated for nearly two years, before the government approved a price of USD8 per million metric British thermal Units in 2013.
BP paid USD7.2 billion for a 30% stake in the field in 2011.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
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