BHP Billiton exits 9 oil & gas exploration projects in India, may hit foreign investments

Written by PTI | New Delhi | Updated: Oct 22 2013, 02:33am hrs
BHP BillitonThe decision to relinquish these blocks is the result of an exploration portfolio review: BHP Billiton Reuters
BHP Billiton Ltd, the world's largest miner, today said it has exited nine out of its 10 oil and gas explorations projects in India as it could not start operations for want of defence approval.

The company said it has relinquished nine exploration blocks awarded between 2008 and 2010 under the New Exploration and Licensing Policy (NELP) after it failed to secure clearance from the Defence Ministry.

"The decision to relinquish these blocks is the result of an exploration portfolio review and the inability to carry out exploration operations in these Blocks," BHP said in a statement.

The company said it has exited the 6 Mumbai basin blocks it was awarded with GVK in the seventh round of NELP in 2008 and three blocks areas it had won in NELP-VIII round.

"BHP Billiton will preserve its 50 per cent interest in its NELP IX block, which is operated by BG Group. We are currently awaiting the results of the seismic survey," it said.

BHP held 26 per cent interest in the NELP-VII blocks while Hyderabad-based infrastructure and energy-focused conglomerate GVK the rest 74 per cent. The Melbourne-based mining company with operations in more than 100 locations worldwide, held 100 per cent interest in the NELP-VIII blocks.

In its annual report for 2012-13 GVK said: "While 2D over /under sesmic data acquisition and processing are completed (in the NELP-VII blocks) the further exploration has hit a road block as some of these are falling within the Jurisdiction of Ministry of Defence."

It admitted that it has suspended further investment. "The management... after careful consideration of the ongoing process and time being taken by the authorities for clearances as of the firm view to wait and watch before infusing any further funds into this project."

The pullout by BHP is the latest in the series of large companies scaling back or ending operations in India over regulatory delays.

South Korea's Posco had in July scrapped a USD 5.3 billion steel mill project while in the same month Luxembourg -based steelmaker ArcelorMittal dropped plans to plan build a second major steel plant in Odisha.

Pullout by BHP ahead of the 10th round of NELP may be bad news for Oil Ministry's effort to attract foreign investors to boost domestic production.

The Oil Ministry is looking at offering as many as 68 blocks or areas for exploration of oil and gas in the 10th round of NELP.

This will be the second highest offering of blocks since the advent of NELP 1999.