ONGC gets to swap blocks

Govt tackles core issues, and more

The government today approved Oil and Natural Gas Corporation's proposal to acquire Cairn Energy's stake in two gas fields for a consideration of $ 135 million.

"The CCEA (cabinet committee on economic affairs) approved a swap deal where the Oil and Natural Gas Corporation will buy into a deep-sea block in the Krishna-Godavari basin and another block off the Gujarat coast, while cairn will get a stake in an inland block in Gujarat and another in Uttar Pradesh," Petroleum Minister Mani Shankar Aiyar told reporters after the cabinet committee on economic affairs meeting.

The deal had been awaiting government approval for over 18 months, an Oil and Natural Gas Corporation executive said.

Following the decision, ONGC will buy Cairn Energy's 90 per cent stake for a consideration of $ 85 million in a block in the Krishna-Godavari basin. One trillion cubic feet gas has been discovered in the block and the Oil and Natural Gas Corporation will now get operator rights.

It would also farm-in 15 per cent exploration interest in a block in the Cambay Basin in offshore Gujarat and acquire another 10 per cent development interest in the Lakshmi and Gauri (LG) fields in the same block.

At present, ONGC has 30 per cent interest in the LG fields, which are producing 109 million standard cubic feet gas daily. The Oil and Natural Gas Corporation will pay $ 50 million for farming-in in the Cambay Basin block.

As part of the swap deal, the public sector company will transfer 30 per cent interest in two exploration blocks "" one in the Ganga Valley and another in the Cambay Basin "" to Cairn Energy. Cairn Energy will pay the Oil and Natural Gas Corporation $ 165,000 for the farm-in, Aiyar said.

The Oil and Natural Gas Corporation plans to commence extensive exploration and appraisal drilling on the Krishna-Godavari basin block once the transaction is completed following completion of the transaction.