ONGC offers oil equity to Shell

Oil giant ONGC has offered Shell a share in its crude production in exchange for services.

"We have offered equity oil. There is nothing wrong with that. I said you bring technology, improve production, and a certain percentage in the upside in production we will share with you," RS Sharma, chairman and managing director, ONGC, told Business Standard.

The two companies had signed a memorandum of understanding earlier this year to explore areas of cooperation across the whole value chain of oil "� in both upstream and downstream activities "� in India and overseas.

Sharma said the target was to freeze an agreement earlier this month but the work on the NELP VI auctions delayed negotiations.

Different working groups have been formed to work out the areas of cooperation, and about half a dozen meetings have already taken place. There are some in the ONGC team, however, who are opposed to this proposal.

A senior ONGC executive said: "ONGC needs exploration and production (E&P) services from Shell. ONGC, like any other E&P company, would like to leverage technology from the top multinational companies. But services in return of equity oil is not a best option."

Sharma conceded that there was some divergence of views but "consensus (on any discussion) is never there from the beginning. We are working on the modalities."

When contacted, a Shell spokesperson said: "The negotiations are progressing and the spirit of joining hands is vibrant. Both organisations will strive to arrive at a win-win situation. Premature comment on specific issues would be prejudicial to the negotiations."