ONGC, Shell fracas continues

It's been almost a year since the country's largest upstream company, Oil and Natural Gas Corporation (ONGC), signed a memorandum of understanding (MoU) with the one of the world's largest oil companies - Royal Dutch Shell - for co-operation in both the upstream and downstream sectors, but the first definitive agreement is yet to be signed.

"Nothing concrete has happened so far though we are in continuous discussions with Shell. Technology sharing pacts are part of the talks," ONGC Chairman and Managing Director R S Sharma said.

Sources said the lack of progress can be attributed to a wide gap between what Shell wants and what ONGC is willing to give. Shell is interested in putting its investments in an onshore oil field in Gujarat in return for a share in the profit oil, or the extra oil that will be pumped out through use of superior technology.

ONGC, however, is not keen to part with equity. "ONGC wants the technology, not the money," a senior ONGC official said. Shell's spokesperson declined to comment.

ONGC's crude oil recovery rate from its western fields is 25-30 per cent. Shell's technology could increase its recovery rate to 40 per cent and above. "ONGC doesn't want to give Shell a share in the profit oil. We are only looking for a service agreement. Talks are on regarding this," the ONGC official said.

The MoU between the two companies - signed on January 19, 2006 - covers co-operation across the full range of upstream and downstream activities, including exploration and production, coal gasification, natural gas, oil products and refining and petrochemicals.