It’s called the googly in cricket; the curve ball in baseball. It’s the probing question that leaves everyone groping for an answer – and feeling just a little out of sorts when you cannot come up with a satisfactory reply.

We have had to face such a situation often: our readers are relentless when it comes to grilling us on issues that are soaked in controversy. They have a touching faith in our ability to provide the answers – and we feel honour bound to provide them, or at least diligently look for them.

But this time we have been stumped by the query: Why did international oil major BP (formerly known as British Petroleum) invest $ 7 billion in Reliance Industries Ltd 21-odd PSC blocks when KG-D6 was the only producing block?

“Considering BP's expertise in oil and gas exploration and development, it is impossible to believe that it would have made such a huge investment for such a lousy field with the potential to produce 10 to 15 MMSCMD,” our questioner said.

BP is a giant and has a highly competent management under the leadership of Bob Dudley. Truth to tell, we had asked ourselves why BP had decided to make this investment. We weren’t being particularly prescient: a number of others had done the same, especially after the virtual collapse of KG-D6 which must rank among the biggest economic disasters this country witnessed in recent memory though its magnitude escaped the government’s radar.

BP would not have invested in RIL without assessing the reserves as its management, unlike in the case of Indian companies, is answerable to its shareholders who are invariably merciless. Yes, BP did assess the reserves rather correctly: it slashed the originally estimated reserves of over 10 trillion cubic feet (TCF) to 3TCF. Yet, it chose to invest $ 7 billion for a 30 per cent stake.

The experts believed that BP had an ulterior motive. It wanted to capture the vast market for its LNG. The 50:50 joint venture that it formed with RIL strengthened the impression that its real target was the country’s growing gas market. Internationally, BP produces a lot of LNG. But it still left everyone puzzling over why BP had decided to invest such a huge amount of money in the PSC blocks just to secure an LNG market.

We know that at one stage, BP was desperate to grab a stake in KG-D6. It made its first gambit when patriarch Dhirubhai Ambani was still alive. Both sons, Mukesh and Anil, had almost agreed to a deal with BP but Dhirubhai overruled them and made it clear to BP’s team that it was he who decided on such matters and not his sons. But after the collapse of KG-D6, Mukesh Ambani-controlled RIL had to approach BP to bail them out of the disaster. Production still continues at the field, but it is in reverse gear.

BP, which has expertise in deep-water E&P, realised the potential of the KG-D6 geology: the ‘potential’ that comes from older rift sequences, older than the ones in which the methane rich gas has been found from the very early days. RIL also knew about this and that could be one of the reasons why it chose not to drill in the areas proposed by DGH, prompting S.K. Srivastava, the then boss of DGH, to accuse RIL of hoarding gas.

The latest discovery, D-55 in KG-D6, in an exploration well in PML area drilled to ultra deep waters after exploration phase was over, confirms that BP invested after realising the potential of the rift sequence. This could explain why RIL-BP first sponsored, through petroleum minister Veerappa Moily, a committee headed by Dr Vijay Kelkar to decide on the price for gas produced from ultra deep waters. Experts assert that it is illegal to permit RIL-BP-Niko to drill an exploration well in PML area after the exploration phase expired. (Click Guest Column: Who Owns The D 55 Field In KG-DWN-98/3)

We approached Kottilil Narayanan, a well-known geologist who presided over DGH council for close to a decade, for his comments. Narayanan says he was consulted a few years ago by GSPC which operates an adjacent block. In one of the seismic lines, he saw a good example of a gas accumulation – what geologists call a ‘flat spot’. Narayanan says ONGC’s wells did find rift basin gas and condensate in two or more of their offshore wells. Although he could not confirm it, he said, “It seems that ONGC has found the same thing in one of their wells in the KG-DWN-98/1 block.”

“There is no doubt at all that the D-55 area has been covered by 3-D seismic surveys and there are very clear indications of gas in such ‘flat spots’. BP would have had the data ‘reprocessed’ to confirm all this,” added Narayanan.

We also sought comments from Surya P. Sethi, an energy expert and former Principal Advisor (Energy) to India’s Planning Commission. He too confirms this theory. “There is gas in deeper horizons and BP was chosen because of its expertise in deep water E&P. Yes, it will be costlier to extract it but that is fine; we can pay a higher price. The rest of the infrastructure is already in place and the investment multiple on that is fully recovered.”

In Sethi’s view, Reliance purposely did not draw strict boundaries between the different phases of the field development as it suited RIL to claim that the entire area had a PML. He asserts that if the terms of the PSC were strictly enforced, then RIL ought to be allowed only 389 square kilometres of the original 7000 plus square kilometres.

The original query regarding BP’s investment has a supplementary. Has BP drilled some test wells of up to 7,000 to 9,000 metres deep and found huge gas reserves? We haven’t been able to get a confirmation regarding exploratory wells drilled before the D-55 discovery.

There is an inescapable fact here: we live in India and we are expected to know how the wheels turn in this country.