BP share price: Group to pressure India over gas prices

on May 12, 2014
Updated: Apr 9, 2020
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iNVEZZ.com, Monday, May 12: BP Plc (LON:BP) and its partners in a gas block, India’s Reliance Industries (NSE:RELIANCE) and Canada’s Niko Resources (TSE:NKO), have filed an arbitration notice against India’s government in the latest escalation of a dispute over gas pricing.

BP’s share price closed 0.08 percent lower at 500.90p in London on Friday.
**BP and partners take India to arbitration**
BP and its partners announced in a joint statement on Saturday that they had issued a notice of arbitration to the government of India over gas prices. The companies operate the country’s richest gas deposit, KG-D6, and had previously won an approval to nearly double the regulated price at which they could sell gas from the field.

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While the new price regime was meant to be implemented on April 1, the Indian Election Commission in March asked New Delhi to defer the increase until the completion of the five-week general election, in which results are due on Friday.
The companies explained in the statement that without clarity on gas prices, they were unable to sanction planned investments of close to $4 billion (£2.4 billion) in the current year, and added that “the continuing delay on part of the government of India” had left them “with no other option but to pursue this course of action”.

In 2011, Reliance sold a 30 percent stake in 21 oil and gas blocks across the country to BP, including the producing KG-D6 block. In December last year, the companies pledged to invest up to $10 billion to quadruple natural gas output in India by 2020. (Oil & gas round-up: BP-RIL to invest $5-$10bn to boost India’s gas output)

“In addition, this will also delay the ability of the Parties to appraise and develop other significant discoveries made last year,” the companies said in Saturday’s statement.
BP’s arbitration notice is the second legal action against India by a FTSE 100 company in less than a week after Vodafone (LON:VOD) filed an arbitration notice on Wednesday in relation to a $2.6 billion tax dispute.

**Analysts on BP**
As of May 9, the consensus forecast amongst 45 polled investment analysts covering BP for the Financial Times advises investors to hold their position in the company.
Analyst Ratings Network reports that the UK energy giant currently has a consensus ‘hold’ rating and an average price target of 493.87p.
**On May 9, buy BP shares at 501.50p.**
**On May 9, sell BP shares at 501.30p.**

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