British Gas India today announced that it has reached an agreement to buy out the assets of Enron Oil & Gas India Ltd for $388 million. The assets include a 30 per cent interest in the Tapti gas field and the Panna/Mukta oil and gas fields as well as a 62.64 per cent interest in the CB-OS/1 exploration licence. All three are located on the west coast of India and are operated by Enron.
However, British Gas India chief executive officer Nigel Shaw said the deal is subject to the condition that British Gas gets operational control of the fields. "If we are not the operator, we will walk away from the deal," he said. The deal, signed in London last night, would require a clearance from the Indian government. Shaw revealed that British Gas India has already initiated a dialogue with the government to this effect.
While Enron has a 30 per cent interest in the Tapti and the Panna/Mukta fields, public sector Oil & Natural Gas Corporation (ONGC) has a 40 per cent interest and Reliance has the balance 30 per cent. "We are in active discussion with both ONGC and Reliance. We are hopeful of wrapping it up by the end of this month," Shaw said.
It is worth noting that ONGC had earlier expressed its willingness to operate the gas fields.
Shaw admitted that the contract between the three existing partners does not lay down the course of action in case a deadlock emerges on the issue of operating the oil and gas fields.
Shaw also disclosed that British Gas is willing to make further investments to ramp up the production of the Tapti and the Mukta/Panna fields. "Further investments have not happened as the partners could not agree. We are looking at the possibility of doubling the production by 2004," he said. When asked what would be the investment required for such an exercise, Shaw said that it would run into hundreds of millions of dollars. The three oil and gas fields together produce around 300 million cubic metres of gas and 29,000 barrels of oil per day.
Commenting on the development, an Enron spokesman said: "The sale is consistent with Enron's evolving business approach to reduce certain of our non-strategic international assets while placing greater emphasis on other business lines around the world".
Enron is in the process of withdrawing from several projects in Asia that it no longer considers core including a major upstream gas project in Saudi Arabia. Last year, after announcing its exit from the oil and gas sector in India, the multinational had appointed Credit Suisse First Boston for the sale of its interests in the fields.
