BP keen on 40% in ONGC blocks

Premiminary talks held on Krishna Godavari, Mahanadi, Bengal, Andaman and Kutch basins.

Oil major British Petroleum (BP Plc) has evinced keen interest in acquiring a 40 per cent stake in Oil and Natural Gas Corporation's (ONGC) deep water oil and gas blocks in Bay of Bengal as well as the western coast near Bombay High.

In the preliminary discussions, BP has shown interest to take 40 per cent stake in Krishna Godavari, Mahanadi, Bengal, Andaman and Kutch basins.

ONGC is handling production in more than 50 deep water blocks in the country, which are mostly in KG, Mahanadi and Bengal basins. In the last four years, ONGC has made 10 significant offshore hydrocarbon discoveries also. Under the New Exploration Licensing Policy (NELP) ONGC has secured 60 oil blocks, including deep water, off shore and on shore.

Due to the differences over issues such as handling of operations, the talk on KG basin had failed in the earlier stage. But now BP is planning to revive discussion on the gas-rich KG basin, according to industry sources.

ONGC had kick started deep water exploration in Kutch in 2003-04 and over invested Rs 1500 crore in this region. But the result was not positive as 12 wells became dry. Accordingly ONGC has stalled the exploration in Kutch. Now, ONGC is looking to restart the exploration with the assistance of BP, they said.

"For deep water oil and gas exploration ONGC is looking for more technical assistance and expertise. BP has proven skill in deep water exploration and production, so the tie-up will benefit both the oil majors," a source close to the development told Business Standard.

BP, the world's second largest oil firm by market value, has a reputation for focussing on big impact exploration. BP executives confirmed that discussion is going on with ONGC, but declined to divulge any details. "The company is looking at the options for cooperation in exploration including the deep water and offshore basin," he said.

"The BP-ONGC discussion is mainly on matters relating to operatorship. But the companies have not reached a conclusion about the equity. However, ONGC will retain the majority stake," ONGC sources said.

BP is controlling some of the assets in and around the international maritime borders near Pakistan. Therefore the oil major can use its technical and geological knowledge base for the exploration in Kutch. BP was earlier in dilagoue with Reliance Industries and ONGC for taking up interests in exploration blocks.