Reliance Industries Ltd. (RIL) investors want Chairman Mukesh Ambani and BP Plc (BP/) Chief Executive Officer Robert Dudley to press Indian ministers to increase the price of natural gas from the nation’s largest field. Billionaire Ambani and Dudley are due to meet Oil Minister S. Jaipal Reddy and Commerce Minister Anand Sharma in New Delhi today, according to the ministries, after BP completed its $7.2 billion acquisition of a 30 percent stake in 21 fields operated by Reliance. They may meet Finance Minister Pranab Mukherjee and Dudley will likely call on Prime Minister Manmohan Singh, the Economic Times reported, citing people it didn’t identify. Reliance and BP want to develop smaller areas adjoining the main KG-D6 block while they chalk out a plan to reverse a slump in gas production from the reservoir. Drilling plans haven’t been approved by Indian regulators and tests show increasing output from existing fields may be unviable at current prices, a person with direct knowledge of the matter said last week. “Reliance really needs to start raising the gas pricing issue,” said Taina Erajuuri, a money manager in Helsinki at FIM Asset Management Ltd., overseeing about 1 billion euros ($1.4 billion) of emerging-market assets, including Reliance shares. “This needs to be addressed with the government as well as speeding up the approvals, which are taking a very long time.” Manoj Warrier, a spokesman for Reliance in Mumbai, declined to comment on the meetings. An e-mail to BP’s India office wasn’t answered. Slow Decisions Profit at Reliance has missed analysts’ forecasts for six of the last seven quarters and its shares have slumped 25 percent this year as production of the cleaner-burning fuel falls. Decisions by India’s cabinet have slowed after a minister, bureaucrats and company officials were jailed over corruption charges related to cellular phone licenses. Reliance is allowed to sell gas from the field off India’s east coast at less than half the price in the U.K. The government set the price of the fuel from the KG-D6 area at $4.2 per million British thermal units in 2007 and is scheduled to revise it in April 2014. The Mumbai-based company sought a rate of $4.5 per million Btu at the time. U.K. gas prices for October rose 1.2 percent to 58.2 pence a therm in London yesterday, or about $9.10 a million Btu. Prices need to be increased to allow Reliance to cover the cost of drilling and building pipelines in deepwater areas, said Chokkalingam G., chief investment officer at Mumbai-based Centrum Wealth Management Ltd., which owns Reliance shares. Free Pricing “Free pricing of commodities, including gas, is essential and the government needs to slowly move toward that process,” Chokkalingam said by telephone yesterday. “That will attract more global companies to invest in India, increase production and achieve demand to meet the economic growth targets.” Tests by Reliance have shown that gas-bearing layers of sand in the two main producing areas of the block are thinner than initially estimated and extraction may require costlier drilling techniques, the person familiar with the company’s plans said last week. Satellite fields in the KG-D6 block and discoveries known as the R-Series together have the potential to produce as much as 35 million cubic meters a day of gas, the person said. That would boost production by 78 percent from the current level of 45 million cubic meters a day. The block produced 60 million cubic meters in June 2010. India imports about 80 percent of its energy requirement. Companies including Petronet LNG Ltd. (PLNG) and GAIL India Ltd. (GAIL) import more expensive liquefied natural gas to meet the shortfall. Use of LNG climbed 1.1 percent to 749,400 tons in August. Market Access BP is seeking to get access to the “fast-growing Indian gas markets,” Dudley said Feb. 21, when the deal with Reliance was announced. The investment by BP will accelerate development and production from Reliance’s fields in India, Ambani said the same day. Reliance may get an additional $1.8 billion from London- based BP if the two companies discover more oil or gas in some of the blocks covered by the agreement. “BP is working in India now for things that will be developed in 20 years,” said Christine Tiscareno, an equity analyst at Standard & Poor’s in London. “India is important for BP. Gas consumption is growing very fast, maybe faster than China’s.” To contact the reporter on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net

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