BP told it can re-apply for ATF licence anytime

Vol 18, PW 17 (23 Apr 15) Midstream & Downstream

All is not lost for BP in its effort to get oil ministry permission to retail jet fuel at Indian airports.

Yes, in March the ministry rejected BP’s initial application. But an oil ministry source assures us there is still hope for the company.

“BP can always apply again," he says, "at a later date.” He explains government rules stipulate that a company must invest at least Rs2000cr ($333m) in the oil and gas sector to get a fuel retailing license.

A BP spokesperson confirms the company’s present CAPEX is less than this amount but declines to reveal the exact figure. “BP’s OPEX (comprising revenue expenditure like salaries) has crossed this,” says BP.

“But the government doesn’t seem to be considering it.” What about the $7.2bn BP spent to acquire stakes at 21 Reliance oil and gas blocks under a deal signed in February 2011? Doesn’t that help it qualify? “This money went to Reliance, not to the government,” says a source.

Happily, BP believes it will reach the necessary CAPEX threshold soon, making it eligible to re-apply for the jet fuel license. Others believe BP is better off staying out of the jet fuel retail business in India where sales grew by a meagre 2% in the year to March 31, 2015 over the previous financial year.

Sales growth in 2015-16 will be the same, predict analysts.