ONGC in JV talks with BP, British Gas for KG basin

In an attempt to hold on to its exploration blocks in the Krishna-Godavari basin, Oil and Natural Gas Corporation's (ONGC) is in talks with British Gas (BG) and British Petroleum (BP) for joint exploration in four offshore blocks in the region.

The British upstream majors would be picking up stakes in the pre-NELP (New Exploration Licensing Policy) blocks owned by ONGC. However, it is still not clear which company will be offered stake in which blocks.

"Talks have been on for quite some time. But certain hiccups have to be cleared before an agreement can be signed," said a senior ONGC official.

While officials in the petroleum ministry said the deal is "almost finalised", and pending approval from Petroleum Minister Murli Deora, spokespersons of ONGC and British Gas declined to comment on the development. British Petroleum comment on the issue could not be elicited.

Sources said an announcement could be made as early as next week.

If the upstream majors step in as partners, they will also share the risk and expenditure related to exploration. This assumes importance as the costs involved in drilling operations and developing deep-sea fields are much higher than shallow water or onland blocks.

Ministry sources that ONGC had earlier wanted to outsource exploration work on the blocks to a third party.

However, the Directorate General of Hydrocarbons (DGH) was opposed to the move as block awardees are not allowed to nominate another company to run the blocks. The DGH had asked ONGC to completely relinquish the block to the government.

"If larger companies cannot strike oil, there are smaller companies which have good track records. The blocks should be relinquished so some other company can be nominated," the senior government official said.

However, ONGC is not willing to return the blocks. It wants to rope in a company in partnership with whom it could continue its exploratory drilling work, and also gain access to technology. It already has a wider technology sharing agreement with British Gas. The agreement is likely to be extended to the K-G basin blocks.

Similarly, BP has assets in some of blocks in and around the international maritime borders near Pakistan. It is expected to use its technical and geological knowledge base of these basins for exploratory work in the K-G Basin.

ONGC and BG, along with Reliance Industries, are also joint stakeholders in the Panna-Mukta and Tapti gas fields in the west coast.