New Delhi - BP and Reliance Industries on Tuesday announced plans to invest over $5bn to reverse a decline in output from India's biggest natural gas reservoir in the Bay of Bengal.
The energy partners, who tied up two years ago, said they would jointly invest in a string of projects to develop four trillion cubic feet of gas resources from the D6 block in the Krishna-Godavari basin to supply energy-hungry India.
At current prices, it would cost more than $50bn to import this volume of gas into India, BP, already India's largest single British investor, and Reliance, India's largest private company, said in a statement.
"The partnership is focused on finding more hydrocarbons and addressing the complexities of the geology along the east coast of India," Reliance's billionaire chief Mukesh Ambani said in a statement.
The announcement came as British Prime Minister David Cameron was in New Delhi on the second-day of a trade-focused official visit during which he declared Britain wanted to be India's trade "partner of choice".
"The decision to join forces with Reliance Industries to invest $5 billion in the next few years in India's gas markets reinforces how two of Britain and India's leading companies can work together," Cameron said.
The firms hope to "significantly contribute to India's domestic production and help the country attain energy security", Ambani said.
In 2011, BP, seeking to benefit from access to new hydrocarbon resources and markets, agreed to buy a 30% stake in 23 of Reliance's oil and gas blocks, including KG-D6, for $7.2bn.
Reliance teamed up with BP in the hope its deepwater drilling expertise would raise output from KG-D6 that has slumped sharply due to geological complexities and left India more dependent on costly imported liquefied natural gas.
"This plan, when implemented, would entail a potential total investment in excess of $5bn over the next three to five years," the two companies said, referring to the KG-D6 gas field.
Gas from these projects "will deliver energy to millions of Indians and would significantly help India in reducing its import dependence", India's petroleum minister Veerappa Moily said.
Greater fuel access for India has become especially vital given turmoil in the energy-rich Middle East and north Africa and the need to reduce a record current account deficit of which fuel imports account for the largest chunk.
Reliance and BP have since formed a 50:50 joint venture to source and market gas in India called India Gas Solutions Private Ltd.
"We will bring all our expertise in deep water to explore the prolific gas basins in India," said BP's Bob Dudley, who was part of what Cameron called the biggest-ever British overseas trade delegation.
Moily promised to "fast-track" India's notoriously slow government approval process so that BP and Reliance could start stepping up development.