Three months after Reliance Industries and BP announced their "transformational" deal in this country, the two have begun operationalising the joint venture.
Significant, as BP's deal with RIL was the biggest foreign direct investment into India, but comes against the backdrop of growing concern over drop in gas production from the flagship Krishna- Godavari block.
In February, BP Plc had agreed to buy 30 per cent stake in 23 oil and gas blocks owned by RIL by paying $7.2 billion (Rs. 32,400 crore).
RIL would receive another $1.8 bn if it strikes more oil or gas. BP will make the payment in three parts before March 31, 2012.
In all, BP and RIL said, total investments could touch $20 billion (Rs. 90,000 crore).
Though all the regulatory and ministerial approvals are yet to come in, two working groups with specific mandates have been set up.
The first is a Joint Implementation Centre, with three representatives each from RIL and BP.
It will eventually become a High Level Overseeing Committee, with an overarching role to manage the 23 exploration and production blocks and ensure smooth functioning of the venture.
Senior RIL executives B Ganguly, senior vice-president, commercial; S C Verma, president, field development, and Rabi Bastia, senior VP and head of exploration are on the JIC.
RIL sources a company official will be managing director and a BP official the joint managing director.
Already three meetings of the JIC had taken place and the initial milestones drafted.
"It's a continuous process and a lot of information and data keeps getting exchanged and shared," said an official in the know.
There will be a second group, a technical committee, which will be a joint working group having the final word on technical matters.
This six-member team will have two members from BP and four from RIL's exploration and development divisions.
EVOLVINGRIL officials said though the broad contours were in place, there could be "some tweaking" of personnel and work profile.
"It has to be a constant process of evolution," added one, on condition of anonymity.
An RIL spokesperson declined to comment on the matter. BP India's spokesperson said: "BP has still not decided on individuals who will represent it on the management/technical committees."
However, sources said key officials
from BP's global workforce, including petroleum geologist Alistair Bent, were involved directly and some had visited India and Reliance offices in the recent past.
In a recent interaction with
Business Standard, Sashi Mukundan, country head, BP Group of Companies, India, had said: "There will be a technical committee which will jointly agree on what needs to be done with each of these blocks.
"It will have people from both companies to make sure there is equal representation. RIL has a good set of capable technical people.
"We did not want to upset the existing arrangement and wanted to keep RIL as the operator. We will bring in technology and experience from the rest of the world."
These two bodies will be separate from the existing management committee, which also has representatives from the ministry and the upstream regulator, the petroleum ministry's Directorate General of Hydrocarbons.
START AND LATER
Executives involved said the immediate focus will be to improve the current production from the KG-D6 block, which has seen output dropping around 20 per cent.
Reliance produced 47.5 million standard cubic metres of gas per day from KG-D6 in the week ended March 26, down from 61.5 mscmd output a year before.
Reliance has so far signed up customers for 60.76 mscmd of gas, while production is less than 48 mscmd.
The attention will then be on the satellite blocks of D6, and bring them on stream.
Subsequently, the attention will be to identify and streamline or "open" the other potential blocks in the Cauvery and Mahanadi basins.
In the latter, RIL holds nine blocks, with gas discovered in only one so far, with contingent resources of 1.5 trillion cubic feet.
Niko Resources holds 10 per cent in the block. In the Cauvery/ Palar basin, RIL holds four blocks, with one discovery.
"Before drilling, BP goes through a lot of rigour. Nobody wants to dig a dry well, as that also impacts global investor sentiments," said an official.
Some, however, believe the 50:50 JV between BP and RIL for sourcing, distributing and marketing liquefied petroleum gas in India will eventually overshadow the explloration and production issues.
"To me, the real deal for BP in India is LNG. They have gas sources nearby in Australia and Indonesia, and India is a market waiting to explode.
"The upside here is far more than upstream exploration and production," said an energy analyst from an international consulting firm.
Three months after Reliance Industries and BP announced their "transformational" deal in this country, the two have begun operationalising the joint venture.