ONGC takes 30% stake in HOEC discovery

Oil and Natural Gas Corporation (ONGC) has picked up 30% stake in the Pramoda oil discovery in Gujarart of Hindustan Oil Exploration Company (HOEC).

"We have exercised our 'walk-in' rights for 30% in the Pramoda oil field in Block CB-ON/7 in the onshore Cambay basin," a company official said.

The block had HOEC and Gujarat State Petroleum Corporation (GSPC) as equal partners with 50% stake each. With ONGC coming in, the stakes of HOEC and GSPC would decline to 35% each.

The official said the management committee of Block CB-ON/7 has approved the plan of development. The development activities comprise
drilling development well and setting up production facilities to put the existing and new wells into production.

Development activities have commenced in full swing to bring the field into production in the current fiscal.

Pramoda-1, near Palej town, 50 kms from Vadodara, had in January 2003 encountered oil and associated gas-bearing sands. So far, 10 wells have been drilled on the block of which two have been put into production.

"Initially, ONGC was reluctant to exercise its 'walk-in rights' as it would have resulted in the state-run company having to foot the statutory levies like royalty and production cess on behalf of the other partners in the block," the official said, adding ONGC took the 30% stake on being asked by the oil ministry to do so.

"The rate of return on sharing 30% of the cost of developing the oil fields (on account of bearing royalty and the cess dues of private firms) was negative," he added.