SRI SHARADA INSTITUTE OF INDIAN MANAGEMENT -RESEARCH

Vasant Kunj, New Delhi

Project report on :

New Product Development In Case Of Tata Nano

SUBMITTED TO: SUBMITTED BY :

Prof. Sartaj khera Jadeja Ghanshyam(20090121)

Kanak Sharma(20090124)

Kanchan Yadav(20090125)

Lakshman Kansal(20090128)

Pankaj Tomar (20090137)

PGDM BATCH (2009-11)

SECTION- A

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ACKNOWLEDGEMENT

We are thankful to Sri Sharada Institute of Indian Management-Research who

provided us with the opportunity for carrying out the study.

We would also like to acknowledge my sincere thanks to our

faculty PROF. SARTAJ KHERA Under her valuable guidance, constant interest

and encouragement, who devoted her ever-precious time from her busy schedule

and helped us in completing the project. Her co-operation was not only useful for

this project but will be a constant source of inspiration for us in the future.

We express gratitude to various faculty members for their

valuable guidance which was a good learning experience in order to make my

efforts successful.

We are also thankful to those who have helped us intellectually

in preparation of this project directly or indirectly.

We are deeply indebted to the various sources of information

from relevant sites from internet and books which helped us a lot in our study and

helped us to learn a lot.

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TABLE OF CONTENTS

SR.NO. PARTICULAR PAGENO.

1. Abstract 4

2.Company Profile-BP

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 3. BP Brands 7

4.Facts And Figures Of BP

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 5.Company Profile - Reliance Industries

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6. Reliance Group Businesses 16

7.The Joint Venture

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ABSTRACT:

BP And Reliance Industries Announce Partnership In India

Reliance Industries Limited and BP announced a partnership between the two companies. Mr. Mukesh Ambani, Chairman and Managing Director of Reliance Industries Limited, and Mr. Robert Dudley, BP Group Chief Executive, signed the relationship framework and transactional agreements in London.

The partnership across the full value chain comprises BP taking a 30 per cent stake in 23 oil and gas production sharing contracts that Reliance operates in India, including the producing KG D6 block, and the formation of a 50:50 joint venture between the two companies for the sourcing and marketing of gas in India. The joint venture will also endeavour to accelerate the creation of infrastructure for receiving, transporting and marketing of natural gas in India.

India

The partnership will combine BP’s world-class deepwater exploration and development capabilities with Reliance’s project management and operations expertise.

Mukesh Ambani said: “We are delighted to partner with BP, one of the largest energy majors and one of the finest deep water exploration companies in the world. This partnership combines the skills of both companies and will be focused on finding more hydrocarbons in the deep water blocks of India and significantly contribute to India’s energy security.”

For BP, Reliance is a natural partner in India, given its strong position in the Indian market.

“This partnership meets BP’s strategy of forming alliances with strong national partners, taking material positions in significant hydrocarbon basins and increasing our exposure to growing energy markets,” said Mr. Carl-Henric Svanberg, Chairman of BP.

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BP will pay Reliance Industries Limited an aggregate consideration of US$7.2 billion, and completion adjustments, for the interests to be acquired in the 23 production sharing contracts. Future performance payments of up to US$1.8 billion could be paid based on exploration success that results in development of commercial discoveries. These payments and combined investment could amount to US$20 billion.

BP’s confidence in India is evident from the fact that the transaction constitutes one of the largest foreign direct investments into India.

The 23 oil and gas blocks together cover approximately 270,000 square kilometres. This will make the partnership India’s largest private sector holder of exploration acreage.

So that the joint venture can capitalise on Reliance’s outstanding project management track record and operations expertise, Reliance will continue to be the operator under the production sharing contracts, whose blocks lie in water depths ranging from 400 to over 3,000 metres. These currently produce about 1.8 billion cubic feet of gas per day (bcf/d), over 30 per cent of India’s total consumption, and over 40 per cent of India’s total production.

“India is one of the fastest growing economies in the world. By allying ourselves with Reliance, we will access the most prolific gas basin in India and secure a place in the fast growing Indian gas markets, creating a genuinely distinctive BP position,” said Bob Dudley. “BP looks forward to a long and successful working partnership with Reliance.”

Completion of the transactions is subject to Indian regulatory approvals and other customary conditions.

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COMPANY PROFILE

BPBP is one of the world's largest energy companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items.

Products and Services

On the road

BP Biofuels  Gas and fuel cards  Gas and petrol stations  Motor oil and lubricants  Route & journey planner  Gas and petrol station locator  BP Target Neutral

For the home

Liquified Petroleum Gas (LPG) Solar powered energy

For business

 Air BP   ARCO Aluminum   Asphalt and bitumen  BP Crudes   BP Franchising  BP Shipping   Gas and fuel cards  Gas and power energy  Industrial lubricants  Invoice tracking system  Liquified Natural Gas (LNG)  Liquified Petroleum Gas (LPG)  Marine fuels and lubricants  Natural Gas Liquids (NGL) 

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 Petrochemicals   Solar power for your business

COMPANY BRANDS

Different personalities, one purposeEach of our brands has its own heritage and personality, but they all have one thing in common.They all symbolize, embody or provide tremendous energy.

BP

The BP brand represents both what we do and what we aspire to do as an organisationBP is our main global brand. It is the name that appears on production platforms, refineries, ships and corporate offices as well as on solar products, wind farms, research facilities and at retail service stations.

Since ‘BP’ petrol first went on sale in Britain in the 1920s, the brand has grown to become recognised worldwide for quality gasoline, transport fuels, chemicals and alternative sources of energy such as wind, solar and biofuels. We help the world meet its growing need for heat, light and mobility, and strive to do so by producing energy that is affordable, secure and doesn’t damage the environment.

BP is progressive, responsible, innovative and performance driven. Our logo – the Helios - symbolises these values. Named after the Greek sun god, the Helios represents energy in its many forms. Of all the forms of energy that make up BP and its services, perhaps the most vital is the human energy our people bring to everything we do. This is what fuels our brand.

Arco

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Known for cleaner fuels and low prices, Arco is a leading gasoline brand in the western USAArco joined the BP group in 2000. Its name and branding appear on all BP-owned and franchise-operated stations in the western USA, from the Rocky Mountains to the Pacific Ocean. In many of its markets, Arco is the leading gasoline marketer, selling more than any other brand. 

About 800,000 people stop by an Arco station every day, to fill up their vehicles with Arco fuels or to fill up their stomachs with some of the fun foods available from ampm, the Arco and BP co-located convenience store brand. 

Arco has a simple business philosophy: “high volume equals low cost”. Essentially this means that Arco is always looking for ways to save money and pass these savings on to the customer. Several cents per gallon saved through efficient choices can really add up. 

Since the 1980s Arco has also been known as a source for cleaner fuels, or blends of gasoline which give off less pollution by keeping the car and truck engines they pass through cleaner. Today CleanTech, an additive in all high-quality Arco fuels, continues to help engines run smoother, while a range of BP-refined gasolines and biofuel blends offer drivers plenty of choice at the Arco pumps.

ARAL

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The blue Aral diamond is a trusted and familiar symbol on the German roadsideAral is one of the most trusted brands in Germany. It has been associated with quality automotive fuels since the 1920s. Today people also associate Aral with good food and excellent service on the go.

Every day more than 2.5 million customers visit an Aral station to fill up on petrol, use an on-site car wash or purchase a beverage or snack. In fact, some 40% of Aral customers stop by just to shop in the sleekly designed retail spaces, which stock a range of convenience items and Aral branded motor oils, along with coffee and food. 

So in addition to being Germany’s leading fuel brand marketer Aral is also the country’s third largest fast food retailer, after McDonald’s and Burger King. 

“Alles Super” is the Aral slogan. “Everything’s super.” So in PetitBistros, Aral’s onsite cafés, you’ll find SuperSnacks, which are made with select ingredients to be super tasty. 

It may be no coincidence then that Aral is a Superbrand, one of 73 brands in Germany to be awarded this designation by an independent organisation. Or that for several years in a row Reader’s Digest readers have named Aral Germany’s most trusted brand in fuel.

CASTROL

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Castrol is widely seen as the world’s truly global lubricants specialistYou have probably heard of Castrol, the lubricants brand BP acquired in 2002. Castrol’s motor oils for automobiles and motorbikes are particularly well known. But did you know that Castrol also makes lubricants for every conceivable application on land sea and in the air?

Castrol’s founder, C.C. Wakefield, believed in working with manufacturers and other businesses to develop lubricants to meet their specific needs, especially where new lubricants could ease the way for advances in engine or industrial design. Castrol continues to work collaboratively like this today as the preferred lubricants partner to VW, Audi, BMW, Komatsu and others. 

Castrol’s brand is about passion, excitement and performance. For many, that means speed. Castrol has been actively engaged with motorsport teams and Castrol-sponsored drivers have broken the land speed record more than 20 times. Such relationships have been a proving ground for Castrol's products and central to building Castrol’s reputation as the world's most advanced engine oils and fluids. 

ampm

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The year was 1978

Back in 1978, the thought of fueling-up more than your car at a service station was unheard of. But the folks at ampm always saw things differently.

The very first ampm store opened its doors in Southern California, as a value-add-on to select ARCO gas stations. From packaged beverages, grab-n-go sandwiches, treats or fountain drinks - the recipe at ampm has always been simple: provide a great value and variety to conquer the snack and thirst cravings of our customers.

Thirty-plus years later, ampm has grown to over 1,100 locations covering California, Oregon, Washington, Nevada, Arizona, Ohio, Illinois, Georgia and Florida as part of select ARCO and BP fueling stations.

Think all convenience stores are alike? Think again.ampm is more than just a quick stop. From hot foods prepared on-site with a fully-stocked freshly-prepared condiment bar to the Thirst Oasis soda fountain (with up to 24 flavors), everything ampm delivers is about snacking your way. Even our coffee service is all about customization: from seasonal flavors and sweeteners, to syrups and toppings, you'd be hard-pressed to find more ways to have coffee your way, than at ampm. But it doesn't end there - ampm prides itself on having one of the widest selections of best selling packaged beverage and beer (where legally available) in the known universe.

So whether you're hungry or thirsty - we've got you covered. ampm. Too much good stuff.

Wild Bean Cafe

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Wild Bean Cafe offers ‘gourmet on the go’ to motorists on four continents.Good food and quality coffee can be hard to come by on the road, but Wild Bean Cafe is an exception to the rule. Tucked into many BP Connect stations, these on-the-go cafés offer inventive sandwiches, fresh baked goods and delicious, fresh-ground coffee. 

Conceived as a brand that would take convenience food to a new level, Wild Bean offers the speed and affordability of more typical service station shops plus one more thing. Everything’s made with quality ingredients and served fresh. You can enjoy your food, coffee or cappuccino in the coffee shop space or take it with you to enjoy on the move. 

Wild Bean Cafe operates in several continents around the world. You’ll find it in parts of Europe, Australia and South Africa. We also have a presence in China and Russia, and new branches are opening all the time.

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FACTS AND FIGURES:

Sales and other operating revenues $239 billion (year 2009)

Replacement cost profit 2 $14.0 billion (year 2009)

Number of employees 80,300 (at 31 Dec 2009)

Proved reserves18.3 billion barrels of oil equivalent

Service stations 22400

Exploration and production Active in 30 countries

Refineries (wholly or partly owned) 16

Refining throughput2.3 million barrels per day (year 2009)

RELIANCE INDUSTRIES

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Reliance Group

The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's largest private sector enterprise, with businesses in the energy and materials value chain. Group's annual revenues are in excess of US$ 44 billion. The flagship company, Reliance Industries Limited, is a Fortune Global 500 company and is the largest private sector company in India.

Backward vertical integration has been the cornerstone of the evolution and growth of Reliance. Starting with textiles in the late seventies, Reliance pursued a strategy of backward vertical integration - in polyester, fibre intermediates, plastics, petrochemicals, petroleum refining and oil and gas exploration and production - to be fully integrated along the materials and energy value chain.

The Group's activities span exploration and production of oil and gas, petroleum refining and marketing, petrochemicals (polyester, fibre intermediates, plastics and chemicals), textiles, retail and special economic zones.

Reliance enjoys global leadership in its businesses, being the largest polyester yarn and fibre producer in the world and among the top five to ten producers in the world in major petrochemical products.

Major Group Companies are Reliance Industries Limited (including main subsidiary Reliance Retail Limited) and Reliance Industrial Infrastructure Limited

Products & Brands

The Company expanded into textiles in 1975. Since its initial public offering in 1977, the Company has expanded rapidly and integrated backwards into other industry sectors, most notably the production of petrochemicals and the refining of crude oil.

The Company from time to time seeks to further diversify into other industries. The Company now has operations that span from the exploration and production of oil and gas to the manufacture of petroleum products, polyester products, polyester intermediates, plastics, polymer intermediates, chemicals and synthetic textiles and fabrics.

The Company's major products and brands, from oil and gas to textiles are tightly integrated and benefit from synergies across the Company. Central to the

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Company's operations is its vertical backward integration strategy; raw materials such as PTA, MEG, ethylene, propylene and normal paraffin that were previously imported at a higher cost and subject to import duties are now sourced from within the Company. This has had a positive effect on the Company's operating margins and interest costs and decreased the Company's exposure to the cyclicality of markets and raw material prices. The Company believes that this strategy is also important in maintaining a domestic market leadership position in its major product lines and in providing a competitive advantage.

The Company's operations can be classified into four segments namely:

Petroleum Refining and Marketing business Petrochemicals business Oil and Gas Exploration & Production business Others

The Company has the largest refining capacity at any single location.

The Company is:

Largest producer of Polyester Fibre and Yarn 4th largest producer of Paraxylene (PX) 5th largest producer of Polypropylene (PP) 7th largest producer of Purified Terephthalic Acid (PTA) and Mono

Ethylene Glycol (MEG)

BUSINESSES

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Exploration and Production

Growth through Energy Security for India

India imports about two-thirds of its crude oil requirement. Exploration and production of oil and gas is critical for India's energy security and economic growth. Reliance's oil and gas exploration and production business is therefore inexorably linked with the national imperative. Exploration and production, the initial link in the energy and materials value chain, remains a major growth area and Reliance envisions evolving as a global energy major.

Over the years the E&P industry has registered significant growth, primarily due to spiraling crude oil and gas prices. With growing competition and ever growing demand for energy, especially from developing countries, the focus is on energy security.

RIL began gas production within six and a half years of gas discovery, in comparison to the world average of 9-10 years for similar deepwater production facilities. Continuous gas production for about a year, with 100% uptime, once again demonstrates the Company’s flawless commissioning and execution capabilities.

Key highlights of the KG-D6 project were as follows:

World’s largest gas discovery in 2002

Among the world’s largest and most complex deepwater gas production facility in the world

Tie Back of 60 kms

Transforming India’s energy landscape

Capacity of 550,000 Barrels of Oil Equivalent Per Day (BOEPD)

Equivalent of 40% of India’s current oil and gas production and has the potential to more than double India’s gas production

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Among the fastest deepwater field development projects

Among the lowest Finding & Development (F&D) cost per BOE for similar deepwater projects

Global-scale project management; simultaneous execution in 20 locations

Among the largest marine construction spread

Equipment weighing 125,000 Metric Tonnes (MT) installed offshore

500 line kms of pipelines and umbilicals installed

Presently, RIL is producing approximately 60 Million Metric Standard Cubic Meters Per Day (MMSCMD) of gas which is being supplied to several priority sectors identified by the Government of India under its gas utilisation policy.

Since production commenced in April 2009, the field has produced over 14.5 billion cubic metres of gas, contributing significantly to the country’s critical industrial sectors.

RIL is enhancing India’s energy landscape. Production from the Dhirubhai 1 and 3 discoveries of the KG-D6 block is likely to result in a quantum leap towards achieving India’s energy security as it has the potential to account for 40% of the country’s current hydrocarbon production. The gas supply from the KG-D6 facility has already impacted various aspects of the country’s economy including:

The Index of Industrial Production (IIP) has acknowledged the significant contribution of production from KG-D6 in the double digit growth registered by the mining sector.

With increased availability of gas, production of indigenous fertilisers has increased and the cost of production reduced, thereby resulting in savings of about Rs. 4,000 crore p.a. in Government subsidies.

There has been a significant improvement of 30% in gas-based power generation in the country duringthe year. 

Production of natural gas from KG-D6 has also reduced the dependence on more expensive liquid fuels that were being used in the steel, refining

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and petrochemicals sectors. 

Within a month of emerging as the largest producer of natural gas in the country, RIL announced a successful assessment of the design capacity of the KG-D6 deepwater gas production facilities in December 2009. A flow rate of 80 MMSCM was achieved through the KG-D6 facilities and delivered to the East-West pipeline.

The economic crisis left an impact on the oil and gas industry globally. The economic downturn that followed resulted in unprecedented demand destruction. The industry is on a path of recovery due to fiscal measures announced by various governments. The major deepwater basins of the world namely the East coast of India, Gulf of Mexico, Africa and Brazil continue to witness huge levels of activity and investment.

The structural theme for investment in the sector remains valid. The world’s insatiable need for reliable and affordable energy continues to grow unabated. This calls for substantial investments, access to resources and newer technologies to unlock resources from challenging locations. The International Energy Agency (IEA), in its World Energy Outlook 2009, estimates that by the year 2030, global energy demand is expected to increase by 49% from its current level. Oil and natural gas are expected to remain primary energy sources and are expected to meet 51% of the global demand. Natural gas, a low-carbon, lowpolluting green fuel-that flows from RIL’s blocks, is creating unprecedented value for the Company’s shareholders and benefiting India. Increasing concern for climate change augurs well for natural gas as it is an environmentally benign fuel with carbon emissions farlower than other fossil fuels.

IEA estimates that the world requires investments to the tune of $ 11 trillion in the oil and gas sector over the next 20 years implying an annual investment of over $ 500 billion.

FY 2009-10 was a year of steady growth. Oil prices rose from an average of $ 46/barrel (bbl) in January 2009 to touch $ 75/bbl in December 2009. Average WTI prices remained at $ 70/bbl vis-à-vis $86/bbl for the previous year. Henry Hub natural gas price averaged at $ 4/Million Metric British Thermal Unit (MMBTU) for FY 2009-10 as against an average of $ 7.87/MMBTU in FY 2008-09.

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The year 2009 also saw the global oil demand slip to 84.93 MBPD, a decrease of 1.5% over 2008. IEA forecasts that the global oil demand is set to increase by 1.67 MBPD or 2.0% to 86.60 MBPD in 2010.

Global Natural Gas Market Growing

Globally, natural gas constitutes 24% of the energy basket while in India it accounts for a mere 9%. The low share of gas in India’s energy consumption is attributed to limited availability and nascent infrastructure. Gas accounts for 35% of the energy mix in the former Soviet Union and Europe, 26% in USA, 17% in Japan and 15% in Korea.

The share of gas in the energy mix is expected to increase to nearly 23% in 2031-32 mainly due to the increasing demand from the industrial sector, power sector, gas distribution in cities and opportunities in the gas-to-liquids business.

Sizeable investments globally over the last few years in developing the natural gas business and related logistical capabilities have resulted in increased availability of gas in key markets. As in the case of crude oil, the natural gas industry is beginning to see the advent of short term, medium term and long term contracts reflecting increased ransportation capabilities and price fungibility. Regional variations in prices are driven primarily out of differentiated transportation costs.

Energy Landscape in India Set for Change

The Indian economy has been growing steadily in the range of 8-9% in the recent past (6.7% in FY 2008-09) and is expected to maintain its status as one of the fastest growing economies in the world with long term GDP growth estimated to be around 9%. Driven by strong economic growth, energy consumption in India has been growing at a CAGR of around 5.3% over the last two decades.

India’s per capita energy consumption is 383 Kg of Oil Equivalent (KGOE) as against the world average of 1,737 KGOE, which indicates a significant potential for growth in the demand for energy. As per the Integrated Energy Policy of the Planning Commission, Government of India, India’s energy need is expected to grow four-fold from 433 Million Tonnes of Oil Equivalent (MTOE) to around 1,856 MTOE by 2032. However, India depends largely on imports

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with over 75% of oil and 16% of gas consumption being imported.

The East coast of India covers a vast stretch of sedimentary area of about 2 million sq. kms. The coast has been divided into three major geological provinces viz. the Mahanadi basin, the Krishna-Godavari basin and the Cauvery-Palar basin.

RIL has more than 25 blocks in the East coast of India with exploration at different stages of maturity. Several discoveries have taken place in all the three basins and a large number of prospects have been identified for drilling. With drilling success ratio of 54%, RIL’s drilling campaign is to target these basins.

Gas production from KG-D6 was started in a record time of six and a half years. The production from this block is expected to provide a quantum leap in energy security to the country. The Krishna-Godavari basin find has been one of the most important development catalyst to various sectors like power, fertilisers, petrochemicals, refineries, gas distribution in cities, etc thereby ensuring energy and food security for the country.

The natural gas sector in the country is evolving and becoming competitive due to the Government’s proactive regulatory approach with respect to policies in upstream, midstream and downstream. This has led to enhanced investments by various players and the emergence of competitive markets.

RIL’s E&P Business : KG-D6

KG-D6 completed 365 days of 100% uptime and zeroincident production. Gas production from KG-D6 has ramped up to 60 MMSCMD in a short span of 9 months from commencement. Current production of about 60 MMSCMD is from 16 wells. The design capacity of the KG-D6 deepwater gas production facilities were assessed and achieved a flow rate of 80 MMSCM. During FY 2009-10, total gas production was 14,397 MMSCM.

Six wells from the D26 oil field in the block are under production. Gas produced from the D26 field was exported to the Onshore Terminal (OT) in the months of November 2009, December 2009 and February 2010.

Oil production from the D26 field now exceeds 35,000 barrels per day. During

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the FY 2009-10, total oil production from this field was 4.04 million barrels.

The facility has undergone extensive quality assurance and quality control audits with the support of international experts like Det Norske Veritas (DNV), Ward Associates and Shell Global Solutions. The pipeline network was put through nitrogen helium tests for leak tests and pressure points. More than 1,000 punch points were addressed within six months, eliminating risk factors. Fatigue tests were also carried out on installed infrastructure to ensure their ability to support the planned 25-year lifespan of the field. The entire development was put through stringent quality checks in compliance with the applicable standards, and organisational and project policies. DNV has carried out certification and verification of all works. DNV reviewed and verified engineering, fabrication and installation of all offshore facilities. DNV also carried out the Hazard Identification and Hazard and Operational Study through the different stages of the project. Other independent surveyors have included Lloyd’s Register and Moody’s International. Extensive and intensive checks were done on all equipment, which included Factory Acceptance Test, Extended Factory Acceptance Test, Systems Integrity Test and Site Acceptance Test prior to installation. Multiple levels of inspection were undertaken by manufacturer’s Quality Control (QC) team, RIL’s QC team and third party QC teams to ensure nothing was left to chance.

For the purpose of gas marketing, GSPAs have been executed with more than 50 customers in the fertiliser, power, city gas distribution, steel, LPG, refinery and petrochemical sectors.

As part of appraisal activities of 4 discoveries in the southern part of the KG-D6 block, RIL successfully drilled 4 appraisal wells in FY 2009-10. The commerciality of these discoveries has been submitted.

In the KG-D6 block, further to the submission of the development plan in 2008 for the 9 satellite gas discoveries, an optimised development plan for prioritising 4 satellite gas discoveries was submitted to the Directorate Generalof Hydrocarbons (DGH) in December 2009.

An integrated development plan for all gas discoveries in the block KG-D6 is being conceptualised to maximize capital efficiency and accelerate monetisation.

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Other Domestic Blocks

The Company made four discoveries during the year which are as follows:

Well R1 in the KG-V-D3 block

Well AA1, BF1 and AH1 in on-land CB-10 block

The Company has also submitted a proposal for commerciality for the following:

Discoveries D28, D37 and D38 in KG-III-5 block

Discovery D35 in CY-D5 block

Discoveries D32 and D40 in NEC-25 block

For discoveries D20, D30, D31, D34 in KG-D6 block

RIL has successfully drilled 4 appraisal wells in the southern and deeper parts of the NEC-25 block. Results of these are being incorporated to generate an integrated development plan for all discoveries to maximise capital efficiency. Appraisal activities are currently underway in KG-D4, CY-D5, KG-III-5, KG-III-6, KG-V-D3 and GS-01 blocks.

During the FY 2009-10, two deepwater blocks of NELP-V round namely KK-V-D1 and KK-V-D2 were relinquished due to their poor prospectivity. Currently, RIL’s portfolio consists of 29 exploration blocks. Also, RIL holds 30% interest in PMT fields. Total domestic oil and gas exploration and production acreage amounts to 290,633 sq. kms.

Panna-Mukta and Tapti Fields

The development of the Panna-K (PK) area has been completed. Current production from PK wells is around 5,000 Barrels of Oil Per Day (BOPD) and around 10 Million Metric Standard Cubic Feet Per Day (MMSCFD) gas.

The South West Panna (SWP) development project was approved in February 2008 with projected 2P reserves of around 4.7 Million Barrels of Oil (MMBO) from about 42 MMBO in-place reserve. New 3D survey indicated a significant reduction in 2P reserves at 1.76 MMBO from about 11 MMBO in-place. The

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Government has approved abandoning the project. Separately, it has approved installing the SWP jacket and deck with minor modifications at Panna L (PL) to advance production by around 12 months and improve the final hydrocarbon recovery from PL.

The development plan of the PL area has been approved by the DGH in June 2009 for completion in 2011.However, with the Government approving the installation of SWP facilities at PL, the project is now expected to be completed in 2010. Initial anticipated total production from PL is approximately 4,000 BOPD from 6 wells.

To arrest the declining gas production in Tapti, 3 infill wells (2 in South Tapti and 1 in Mid Tapti) have been approved for drilling in Q3/Q4 FY 2009-10 by the Management Committee. MTA-6 well has been already drilled and is currently producing around 35-40 MMSCFD gas. STA-7 well has also been drilled and is currently producing 35 MMSCFD of gas. The STC well is currently being drilled and post the drilling of this well, gas production from Tapti is expected to be ramped up from the current level of around 315 MMSCFD to around 330 MMSCFD. A development plan for Mukta (MB area) is being planned to be submitted to the Government of India for approval after the results of a pre-drilled well to be drilled in 2010-11 are reviewed.

Panna-Mukta fields produced 1.8 million tonnes of crude oil and 1,965 MMSCM of natural gas in FY 2009-10, registering a growth of 9% and 18% respectively over the previous year. Higher volumes in the first half are due to full production as compared to lower production registered in the same period last year on account of downtime due to repairs (PPA Hot Oil Heater).

Tapti fields produced 187,000 tonnes of condensate and 3,102 MMSCM of natural gas for FY 2009-10, a decrease of 31% and 26% respectively as compared to the previous year. The decrease in production was due to a natural decline in the reserves.

CBM Blocks

The development plan for Sohagpur CBM blocks has been approved by the Government and development activities have been planned to commence in FY 2010-11 by drilling and completion of additional wells. Prolonged production testing was undertaken in the wells drilled in Sohagpur CBM blocks with

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favourable results. The plan for 2010– 11 is to monetise the production capability from the present as well as the proposed wells.

During the year, two CBM blocks BS-1 and BS-2 were relinquished. With this, RIL currently holds a total of 3 CBM blocks.

International Business

In April 2010, RIL entered into a joint venture with the USA based Atlas Energy, Inc. (Atlas) under which RIL acquired 40% interest in Atlas’ core Marcellus Shale acreage position. RIL has become a partner in approximately 300,000 net acres of undeveloped leasehold in the core area of the Marcellus Shale region in southwestern Pennsylvania for an acquisition cost of $ 339 million and an additional $ 1.36 billion capital costs under a carry arrangement for 75% of Atlas’s capital costs over an anticipated seven and a half year developmentprogramme.

Low operating costs and proximity to USA northeast gas markets combine to make the Marcellus Shale region one of the most economically attractive, unconventional natural gas resources play in North America. The acreage will support the drilling of over 3,000 wells with a resource potential of approximately 13.3 Trillion Cubic Feet equivalent (TCFe). While Atlas will serve as the development operator for the joint venture, RIL is expected to become a development operator in certain regions in the coming years in the JV.

Atlas will continue acquiring leasehold in the Marcellus Shale region and RIL will have the option to acquire 40% share in all new acreages. RIL also obtained the right of first offer with respect to potential future sales by Atlas of around 280,000 additional Appalachian acres currently controlled by Atlas (not included in the present joint venture). The RIL-Atlas joint venture has the potential to become one of the largest prime acreage holders in the Marcellus Shale region.

This joint venture will materially increase RIL’s resource base and provide an entirely new platform from which to grow its exploration and production business while simultaneously enhancing its ability to operate unconventional projects in the future.

Additionally, RIL has farmed out 20% PI in the blocks Borojo North and Borojo

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South in Colombia; and 30% PI in block 18 and 25% PI in block 41 in Oman. The Regional Government of Kurdistan has assigned third party participating interest of 20% each in blocks Rovi and Sarta to M/s OVM; the assigned agreement is yet to be signed by RIL. RIL now has 13 blocks in its international E&P portfolio including 2 in Peru, 3 in Yemen (1 producing and 2 exploratory), 2 each in Oman, Kurdistan and Colombia, 1 each in East Timor and Australia; amounting to a total acreage of over 93,500 sq. kms.

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THE JOINT VENTURE

BP and Reliance Industries Announce Transformational Partnership in India

Release date: 21 February 2011Reliance Industries Limited and BP to participate across the gas value chain in India

BP to take a 30 per cent stake in 23 oil and gas blocks

Reliance Industries Limited and BP today announced a historic partnership between the two companies. Mr. Mukesh Ambani, Chairman and Managing Director of Reliance Industries Limited, and Mr. Robert Dudley, BP Group Chief Executive, signed the relationship framework and transactional agreements in London. 

The partnership across the full value chain comprises BP taking a 30 per cent stake in 23 oil and gas production sharing contracts that Reliance operates in India, including the producing KG D6 block, and the formation of a 50:50 joint venture between the two companies for the sourcing and marketing of gas in India. The joint venture will also endeavour to accelerate the creation of infrastructure for receiving, transporting and marketing of natural gas in India.

The partnership will combine BP’s world-class deepwater exploration and development capabilities with Reliance’s project management and operations expertise.

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Mukesh Ambani: “We are delighted to partner with BP, one of the largest energy majors and one of the finest deep water exploration companies in the world. This partnership combines the skills of both companies and will be focused on finding more hydrocarbons in the deep water blocks of India and significantly contribute to India’s energy security.”

For BP, Reliance is a natural partner in India, given its strong position in the Indian market. 

“This partnership meets BP’s strategy of forming alliances with strong national partners, taking material positions in significant hydrocarbon basins and increasing our exposure to growing energy markets,” said Mr. Carl-Henric Svanberg, Chairman of BP. 

BP will pay Reliance Industries Limited an aggregate consideration of US$7.2 billion, and completion adjustments, for the interests to be acquired in the 23 production sharing contracts. Future performance payments of up to US$1.8 billion could be paid based on exploration success that results in development of commercial discoveries. These payments and combined investment could amount to US$20 billion.BP’s confidence in India is evident from the fact that the transaction constitutes one of the largest foreign direct investments into India.

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The 23 oil and gas blocks together cover approximately 270,000 square kilometres. This will make the partnership India’s largest private sector holder of exploration acreage. 

So that the joint venture can capitalise on Reliance’s outstanding project management track record and operations expertise, Reliance will continue to be the operator under the production sharing contracts, whose blocks lie in water depths ranging from 400 to over 3,000 metres. These currently produce about 1.8 billion cubic feet of gas per day (bcf/d), over 30 per cent of India’s total consumption, and over 40 per cent of India’s total production.“India is one of the fastest growing economies in the world. By allying ourselves with Reliance, we will access the most prolific gas basin in India and secure a place in the fast growing Indian gas markets, creating a genuinely distinctive BP position,” said Bob Dudley. “BP looks forward to a long and successful working partnership with Reliance.”

Completion of the transactions is subject to Indian regulatory approvals and other customary conditions.Notes to editors:

BP has been working with Reliance since December 2008 on the D-17 deepwater block in the Krishna Godavari (KG) basin on the east coast of India. BP, with a 50 per cent interest, operates the block and Reliance holds the remaining interest.

Reliance Industries Limited (RIL) is India’s largest private sector company on all major financial parameters with a turnover of Rs 2,00,400 crore (US$44.6 billion), cash profit of ` Rs 27,933 crore (US$6.2 billion), net profit of Rs 16,236 crore (US$3.6 billion) and net worth of Rs 1,37,171 crore (US$30.6 billion) as of March 31, 2010.

RIL is the first private sector company from India to feature in the Fortune Global 500 list of 'World's Largest Corporations' and ranks 100th amongst the world's Top 200 companies in terms of profits. RIL ranks 68th in the Financial Times FT Global 500 list of the world's largest companies. RIL is rated as the 15th ‘Most Innovative Company' in the World in a survey conducted by the US financial publication - Business Week in collaboration with the Boston Consulting Group. For more details go to www.ril.com.

BP has a strong presence in India in addition to its interest in block D-17. Castrol India Limited is a market leader in the retail automotive lubricant business, including car engine oils, premium 4-stroke motorcycle oils and multi-grade diesel engine oils. Castrol India also operates in the industrial

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and marine lubricants markets. Tata BP Solar, a joint venture between BP Solar and the Tata Group, has been operating in India since 1989. It is a leader in the Indian solar energy market, manufacturing solar cells, solar PV modules and systems. BP employs around 8,000 people (both direct and indirect staff) in India, with its main centres of employment in Mumbai, Delhi, Bangalore, Calcutta and Chennai. For more details go to www.bp.com/India.

According to BP’s Energy Outlook 2030, energy consumption in India has grown by 190% over the past 20 years and is likely to grow by 115% over the next 20 years, a rate of over 4% per annum. Gas is expected to be the fastest growing fossil fuel, with demand growing at a rate of nearly 5% a year between 2010 and 2030. India’s gas consumption was 5.0 bcf/d in 2009 and is estimated to have been 6.1 bcf/d in 2010 (comprising 4.9 bcf/d production plus 1.2 bcf/d LNG imports). Total Indian gas consumption is projected to grow to12.5 bcf/d in 2025, and exceed 15 bcf/d in 2030.

The aggregate gross profits attributable to BP’s 30 per cent share of the 23 production sharing contracts to be acquired is Rs. 1336 Crores (c. US$300 Million), as derived from the aggregate EBIT under the production sharing contracts for the financial year ending 31 March 2010.

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