Reliance argues with BP over Iran LNG project

Vol 7, PW 24 (25 Feb 04) People & Policy

For the last year weve heard very little about Reliances plan to partner BP in a project to export LNG from Irans South Pars gasfield.

We now know why. An industry source tells us that major differences have emerged between Reliance and BP and that a question mark now hangs over the future of the project itself.

At the heart of the differences are competing claims over who will control the venture. BP wanted to be the project leader with responsibility for supplying the LNG liquefaction technology and constructing the project in Iran.

But Reliance, we are told, was unwilling to accept the role of sleeping partner with the task of just bringing in its share of money for the liquefaction project. BP claimed that it has some special natural gas liquefaction technology and that it has experience in LNG projects.

Reliance refused to accept this argument. What special technology is BP talking about asks an industry source.

Reliance built Asias largest refinery (27m t/y at Jamnagar) in record time even though it had no previous petroleum industry experience. Reliance successfully entered the exploration business with no previous experience.

And Reliance has now set up Indias largest mobile phone network, also without any prior experience. A key point of contention between both companies was how to construct the gas liquefaction facility in Iran.

BP wanted to have sole responsibility for construction but Reliance wanted the project to be tendered and the contract awarded to the best bidder. Reliance was itself planning to bid if BP accepted its argument, we are told.

Technology is easily available for natural gas liquefaction. You pay the right price and youll get the best technology available.