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Last Updated: Monday, 17 October 2005, 12:02 GMT 13:02 UK
Gas giants fight for India field
BP tanker
BP is looking for opportunities in India
BP, Chevron and ExxonMobil are vying for a stake to develop a huge natural gas field in India, reports say.

The trio are said to be in talks with Reliance Industries, India's largest private sector gas explorer, about the area in the Krishna Godavari basin.

Energy experts estimate that the field, India's largest gas discovery in 30 years, is worth $4bn (2.2bn).

BP boss Lord Browne said the firm wanted to raise its profile in India, and praised the Krishna field.

'Important discovery'

Lord Browne told The Financial Times (FT) that BP was looking at a number of options to develop its business in India, spanning exploration, production and refining.

"It is an important set of discoveries in a world-class basin," he said of the Krishna field, which is in the Bay of Bengal.

"It would be good if BP were represented there."

Reliance discovered the field in 2002 and subsequently sold a 10% stake in it to Canadian firm Niko Resources.

The government is happy because it wants to attract the oil majors into India
Praveen Martis, Wood Mackenzie

However, experts said that Reliance had little experience of deep water exploration and was keen to bring in specialist expertise in this area.

Although production is unlikely to begin before 2008, the project is potentially highly lucrative.

According to energy analysts Wood Mackenzie, the field holds an estimated 6,000 billion cubic feet of proven and probable reserves, while the ultimate yield could potentially be twice as large.

"The field is not very big by international standards, but for India it is the biggest gas discovery since the Bombay offshore fields in the 1970s," Praveen Martis, an analyst at Wood Mackenzie, told the BBC.

"For India it is very important, particularly in the current situation where it is struggling to find gas, and consumption is increasing."

Energy needs

India urgently needs to develop its own energy resources to help sustain its rapid economic growth.

It produces less than half of the gas it needs and signed a deal with Iran in July to import five million tonnes of gas a year.

The world's largest energy companies are looking to expand their interest in India, with BP recently signing a deal to help build a $3bn refinery in Hindustan.

Mr Martis said foreign involvement in the project would be good for all parties concerned.

"The returns are big enough for the oil majors to participate, Reliance is happy because of the expertise they will provide and the government is happy because it wants to attract the oil majors into India," he said.

ExxonMobil told the FT it would consider opportunities meeting its investment criteria. Chevron did not comment.

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