NEW DELHI: Global supermajor BP plc’s will continue to function in India with Mukesh Ambani’s owing to an unwritten strategic partnership even after its exclusivity with Reliance Industries Ltd has ended.
BP’s outgoing India head Sashi Mukundan said that the energy giant had spent $7.2 billion to acquire 30 per cent interest in 23 oil and gas blocks of Reliance in 2011.The eastern offshore KG-D6 block was a key element of the agreement, which included a 10-year exclusivity period with Reliance, during which BP would be undertaking energy projects or investments in India.
Till date, the oil and gas firm has invested more than $ 12 billion across the energy value chain that includes three new deepwater natural gas projects in KG-D6, accounting for one-third of India’s gas production.
“We started working with Reliance as early as 2005 when first (the then BP CEO) Lord John Browne visited India,” Mukundan said.
It finally fructified in the 2011 deal. “13 years since we did the upstream deal, not once have we gone back and looked at the contract,” he said, adding the partnership with Reliance is not a contract based but one based on “trust and relationship”.
Mukundan said that anytime the two partners have any issues, they just sit face to face, “I just have to make a call or (send a) WhatsApp (message) and say I want to come and see you. And you know, between him (Mukesh Ambani, Chairman and Managing Director of Reliance Industries Ltd) and Mr (PMS) Prasad (Executive Director at Reliance), we resolve everything.”
Mukundan said the original deal for stake in upstream oil and gas exploration and production assets has grown into the retail partnership and EVs and continues to grow.
“In the (2011) contract, the exclusivity was for 10 years. That expired. But there is an unwritten… I wouldn’t call it agreement, but it’s an unwritten feeling that, basically, we are their strategic partner, and they are our strategic partner. And I think both companies have actually stuck to it,” he said. “Anytime we get approached, we say no. Anytime they get approached, they say no.”
He said that BP-Reliance “are exclusive more from a relationship standpoint” and for Ambani, BP is its strategic partner.
Responding to why BP chose Reliance instead of any other Indian firm like state-owned Oil and Natural Gas Corporation (ONGC), Mukundan said Reliance had a very large exploration acreage spread over 270,000 square kilometers that gave it materiality.
BP-Reliance teamed up with ONGC to bid for a Gujarat offshore block in the recently concluded bid round for oil and gas exploration acreage.
Mukundan said BP’s approach all these years has been to “work with what India is looking for”.
“And through the years, have always said that the right way to do stuff is to work as partners across and share infrastructure,” he said, citing the example of the US where BP is a competitor with Chevron, Shell and other global giants but work together in the Gulf of Mexico.
BP supports the government regarding exploration in the country so that more oil and gas can be produced and reliance on imports is reduced. “And with that (objective in mind), we had the conversation with ONGC, Reliance and we agreed that it would be a powerful combination to have the three of us together — a national oil company, the largest private company and the most successful international company in India, all working together,” he said.
Talking about BP’s future plans, Mukundan said the investment strategy rests on four pillars: resilient hydrocarbons, lubricants, mobility and renewables.
Even though BP has been present in the renewable energy space since long back, it believes India is going through an energy addition phase where it will need fossil fuels to meet rising energy needs.
He said that their venture’s KG-D6 block produces a third of India’s natural gas. The block also produces oil. “And we have plans to do more in that block. And we have got two other blocks next to it, which we will continue to explore.
And hopefully use the same infrastructure that we have built,” he said. BP-Reliance would be investing a couple of billion dollars in the two blocks.
The second pillar is customers and products where BP has Castrol, a lubricant brand present in India for 125 years. “Castrol has been predominantly a lubricant business, but now they are moving into EV fluids.
He informed that both the companies are looking at compressed biogas and CNG followed by EV charging. He added that the joint venture just inaugurated the 5,000th charging point.
The venture owns 5,000 of all charging station which are fast charging charge points through which it can charge some top cars in minutes.
BP has also developed their own solutions and backed startups in the third pillar or the low carbon space.
The last pillar is people. “When I first started in India, I used to call it the 3Ms – molecules, markets, and minds.”
