The official said BP's $477 million investment since entering in 2011 included both capital and operating expenditure, mostly in its partner Reliance Industries' offshore blocks, including the flagging KG-D6 in Krishna Godavari basin.

The government has rejected BP's application for selling ATF, saying its expenditure in India so far does not qualify it to get a fuel retailing license, but has allowed it to apply afresh with more details.

The Petroleum Ministry, earlier this month, wrote to Europe's second-largest oil company, saying its USD 477 million investment in India till date does not qualify it to begin selling jet fuel to airlines, a senior Oil Ministry official said.

A license to retail any of the transport fuels -- petrol, diesel or aviation turbine fuel (ATF) -- is contingent upon a company investing or proposing to invest Rs 2,000 crore in oil and gas exploration and production (E&P), refining, pipelines or terminals within 10 years.

The official said BP's $477 million investment since entering in 2011 included both capital and operating expenditure, mostly in its partner Reliance Industries' offshore blocks, including the flagging KG-D6 in Krishna Godavari basin.

To qualify for a fuel retailing license, an entity should have made capital investment of Rs 2,000 crore or $500 million, in line with the 2002 fuel retailing guidelines. BP's $7.2 billion spending in buying 30% stake in 21 exploration blocks of RIL is not being considered as capital investment, he said.

He added that the letter clearly states that BP can make fresh application detailing future investments to qualify for an ATF license. When contacted, BP spokesperson said, "BP has been continuously engaging with the Ministry of Petroleum and Natural Gas regarding the licensing application and we are confident of meeting the requirements. We will continue to work closely with government authorities and urge them to review the decision."

The company had, in January 2014, made the second application to start operations of Air BP, its aviation arm that sells ATF to airlines at airports. It is keen to enter the booming aviation market in Asia's third-largest economy. Jet fuel demand is expected to rise by 3-4% annually over the next few years.

After BP's application, the then Oil Secretary Vivek Rae had stated that BP was "looking at marketing of aviation turbine fuel (ATF). BP was not interested in auto fuel retailing (setting up petrol pumps) in the country.

Rae had said that ATF sale was deregulated in April 2002 and any company which is able to tie-up logistics can enter the sector. While jet fuel bunkering at most of the airports in the country is owned and controlled by state-run firms, refuelling infrastructure at new airports, built by private firms, is bid out and allows third party to access the infrastructure.

"BP can either buy ATF from local refineries like Reliance Industries or can import. That is not an issue," Rae said. Third party access to storage and refuelling infrastructure at airports would allow access to BP but the challenge would be to arrange for logistics to carry the fuel from refinery or port of import to the airport because unlike state-owned firms, BP does not own pipelines to transport it.

In 2002, India had allowed private companies to enter into fuel retailing, subject to minimum investment criteria. Reliance Industries, Essar Oil and Royal Dutch Shell got licences and opened petrol pumps.

However, RIL shut pumps and other companies went slow on expansion as the government gave huge subsidies to state-owned firms, practically making it impossible for private companies to compete. After the government deregulated diesel prices in October 2014, private firms have again begun fuel retailing.

Source:dnaindia.com