Ever wondered why partners Reliance Industries and BP seem to read from different sides of the same page when it comes to their trophy KG basin block D6?
It is because RIL tends to overlook the small details and stick to not-so-rosy big picture due to its extreme animosity with the oil ministry, and BP looks at the big picture as at stake is the $7.2 billion it paid for a 30 percent stake in the block, says a report in The Economic Times.
There are positive developments, says the report. The government’s clearances are resuming, the CAG has been ring-fenced and Oil Minister Jaipal Reddy is likely to be moved out. But RIL’s response is guarded.
“We rather hope not, but there is a possibility that future projections might be affected if such restrictive practices continue,” an RIL spokesperson has been quoted as saying in the report.
In contrast is BP, which reiterates its commitment to Indian projects. “D6 (the trophy block) continues to be our main focus,” says Sashi Mukundan, BP India chief, in the report.
The company has even kicked off an image-building exercise in the country.
“At $7.2 billion, this was always a pretty large chunk of change for BP under normal circumstances. Right now, they seriously need to start convincing the city of London (the stock market there) that they haven’t paid massively overpaid,” Matthew Hulbert, lead analyst at European Energy Review, a Netherlands-based energy publication, has been quoted as saying.
The company is focusing on three areas in its RIL JV: gas field development, exploration and gas marketing.
BP’s campaign fits in its long-term strategy for India.
“It’s more of a trust issue. If a company is having a difficult time, then it’s important to reposition your brand,” Wilfried Aulbur, managing partner India with Roland Berger Strategy Consultants, has been quoted as saying in the report.
“The stakes are high for both companies—primarily financial for RIL and reputational for BP—and they are both dealing with it in their own ways,” says the report.
Read the full report here.