BP threatens to pull out of KG block over defence curbs | business | Hindustan Times
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BP threatens to pull out of KG block over defence curbs

Despite the recent conditional clearances accorded to a dozen-odd domestic and global developers of oil and gas blocks in India, many companies are unhappy with new limitations imposed, and may move out of these blocks. Anupama Airy reports.

business Updated: Jun 10, 2013 03:32 IST
Anupama Airy

Despite the recent conditional clearances accorded to a dozen-odd domestic and global developers of oil and gas blocks in India, many companies are unhappy with new limitations imposed, and may move out of these blocks.

Anil Agarwal-led Cairn India expressed reservations on the new restrictions to the petroleum ministry on April 26. Global energy major BP of the UK has gone a step ahead and offered to surrender its block in the KG basin due to these constraints.

In a May 27 letter to the petroleum ministry, BP, the operator of a block as a partner with Mukesh Ambani’s Reliance Industries, wrote: “Given that 70% of the block area falls under the Impact Zone required for Navy and DRDO testing, the block practically becomes a ‘No Go’ Zone for continuous exploration and subsequent development activities, thereby preventing contractors from carrying out petroleum operations.”

“BP can confirm the proposed relinquishment of block KG-DWN-2005/2 as 70% of the block area falls under the ‘impact zone’ delineated by the Government of India it prevents contractors (BP-RIL) from carrying out petroleum operations and the same has been informed to the authorities” BP’s spokesperson told HT.

RIL also confirmed the move, as did Cairn India.

Cairn India’s spokesperson said the company has written to the government on the issue, and had told the petroleum ministry that a large part of its Krishna Godavari (KG) basin block (35%) has become operationally infeasible because of new limitations.

The No-Go Area runs right through the block, leaving small portions on either side for exploration, it said.

A source close to RIL said most blocks that have been surrendered were either did not have great prospects or were relinquished due to constraints imposed by government departments and ministries over their development.