UK-based multinational energy company BP has sought compensation from the Indian Petroleum Ministry for the 1,949km² Krishna Godavari basin (KG-D17) block after it was forced to halt work due to restrictions imposed by the defence ministry.

BP, along with its partner Reliance Industries, has won the block as part of the seventh round of auction under New Exploration Licencing Policy in 2008.

The company in its letter to the Oil Ministry in May, said its exploration work was restricted in the block by the Indian Defence Ministry on the grounds that about 70% of the block area is assigned for carrying out the Defence Research and Development Organisation (DRDO) and Navy activities.

BP further said that the block is classified as ‘Impact Zone’, where exploration of oil and gas was practically not possible.

In the same letter, BP exploration vice president Alistair J A Bent said that the company considers defence exercises conducted by the Ministry of Defence at the block introduces high risk beyond the control of contractors.

"However, we are willing to consider an option to carry out a similar level of activities if equivalent new acreage is given in a mutually agreed area for exploration," Bent added.