ONGC comes back to bag 21 oil blocks

Empowered group overrules DGH's recommendations.

Setting aside the controversial recommendations of the Directorate General of Hydrocarbons (DGH), the Empowered Committee of Secretaries (ECS) today decided against penalising upstream major Oil and Natural Gas Corporation (ONGC) for a poor exploration record, choosing to award it 21 blocks.

These will include the 12 deep-water blocks that the DGH sought to deny the company, though it was the highest bidder, citing poor past performance in exploration, as well as the surrender of some blocks.

In a rather unique formula, the DGH had suggested giving away the blocks, auctioned under the just concluded New Exploration Licensing Policy (NELP) VI, to the second highest bidders through a process of negotiation.

The ECS, which comprises officials from the petroleum, finance, and law ministries, was against denying the blocks to ONGC since it felt such a move would be tantamount to the unacceptable practice of "changing bid criteria after bid submission," official sources said.

ONGC's consortium partners for the deep-water blocks, which would also have been hurt by the decision, include Gujarat State Petroleum Corporation, Hindustan Petroleum, GAIL (India) Ltd, Bharat Petroleum, and Cairn.

The ECS upheld the "clear recommendations" given by the DGH for all the other blocks. Its decision, which has to be ratified by the Cabinet, means that ONGC will walk away with the largest chunk of the blocks on offer under NELP VI.

The other large gainer in the round is Reliance Industries, which is set to bag seven blocks. Gas and pipeline major GAIL (India) has a stake in 15 blocks, Oil India, in seven, while Indian Oil and Cairn India have a stake in two blocks each.

International companies like Santos, Prize Petroleum, and Naftogaz have also managed to secure stakes in multiple blocks.

The production sharing contracts for the blocks are expected to be signed by January 2007.