Shell eyes stake in OIL, ONGC blocks

Shell India, the subsidiary of Royal Dutch Shell, is eyeing a stake in OIL and Natural Gas Corporation's (ONGC) onshore oil and gas blocks at the west coast of India.

Both the companies are in talks for a tie-up in exploration and production. Earlier, ONGC had signed a memorandum of understanding with Shell Exploration Company for wide ranging co-operation in hydrocarbons value chain.

A source close to the development said Shell was looking for a product sharing agreement with ONGC. "The experience of Shell in upstream ventures will equip ONGC technically to fasten the work and enhance production," the source said.

Officials at both the companies refused to comment.

Recently, ONGC had made significant oil and gas findings in the western offshore region. Among the findings, multiple oil and gas bearing sands have been identified in the Panna formation off Mumbai High.

"The oil and gas are of high quality in this region," the source said, adding that Shell's entry would open up a new exploration opportunity in the west coast.

ONGC and Shell are looking for a collaboration in overseas exploration and production ventures also.

The companies are also considering joint development of coal bed methane gas, export of petroleum products from the ONGC subsidiary"" Mangalore Refinery and Petrochemicals (MRPL), and manufacture of high grade bitumen.

The Dutch company is keen to participate in MRPL's 15 million tonne new refinery and petrochemicals projects.

Meanwhile, ONGC Videsh, the foreign arm of ONGC, had bought 15 per cent stake in a Brazilian offshore oil field for about $170 million from Shell.

The Brazilian acquisition would leave Shell with 50 per cent stake in the oil field and Brazil's state-run oil firm Petrobras with 35 per cent stake.

ONGC had also signed an agreement with Halliburton to redevelop Lakhmani, Lakwa and Geleki oil and gas fields in Assam.

"The company is planning to enhance production from Assam to 3 million tonne per annum (MTPA) from the current 1.2 MTPA with an investment of Rs 3,100 crore. It will take three years to complete the production enhancement programme."