BG to expand Indian operations

UK energy firm BG Group plans to invest around $ 500 mm in India over the next three to five years to expand its operations here, said a senior BG executive.
"We're looking at major investments in oil and natural gas exploration and production activities, as well as building a LNG import terminal in western India," Praveen Tandon, director of British Gas India told.
British Gas India is a wholly-owned subsidiary of BG. British Gas entered India in 1991 and has so far invested close to $ 550 mm in the country. Tandon said BG is awaiting the announcement of the fourth round of the Indian government's new exploration licensing policy, or NELP-IV, to firm up its plans of making bids for oil and gas blocks.

The government has said domestic and foreign firms will likely be offered about 30 oil and gas blocks under NELP-IV soon. So far, under the three rounds of NELP, the government has signed production sharing contracts for 70 oil and gas blocks, both offshore and onshore.
"Whether we bidor not, will depend entirely on what's on offer, but our preference will be for offshore blocks," said Tandon. He said BG plans to build a 5 mm tpy LNG, or LNG, import terminal at Pipavav in the western state of Gujarat and is looking at a long-term supply deal.
"There's a huge energy deficit in India and the demand for gas is expected to grow exponentially," said Tandon. "We are currently talking to potential LNG suppliers in the Middle East, which include the National Iranian Oil Co.," he said, adding that BG's Pipavav LNG terminal is expected to come on stream by early 2007.

India's consumption of natural gas and petroleum products far outstrips the local supply, with gas production at 67 mm cmpd compared with demand of 151 mm cm. The country also imports around 70 % of its crude needed.
Tandon said BG along with its partners, state-owned Oil & Natural Gas Corp., or ONGC, and Reliance Industries is producing 8 mm cmpd of natural gas from the Panna-Mukta and Tapti offshore fields in Gujarat. The Panna-Mukta field is also producing about 25,000 bpd of crude oil.

Tandon said the group wants to double the output of the two fields over three to five years. This is expected to cost about $ 700 mm and BG will meet 30 % of that amount, he said. BG has a 30 % stake in the Panna-Mukti and Tapti fields and a 63 % stake in another exploration license. Both were acquired last year when BG bought Enron Oil & Gas India's stake for $ 350 mm.
ONGC owns a 40 % stake in Panna-Mukta and Tapti fields while Reliance owns the remaining 30 %. The Indian unit currently contributes about 7 % of BG global business.