MNCs queue up for oil, gas exploration

Foreign oil companies appear to be bullish on oil exploration prospects in India even as they expect to sort out some outstanding issues with the government.

Cairn Energy""which has made the biggest onshore discovery in the recent times in India but found itself locked in a battle with ONGC over payment of cess"" today expressed interest in taking part in the fifth round of bidding under NELP.

Cairn's Vice-President Mike Watts would be accompanying Aiyar for the NELP roadshows, the company's chief executive officer Bill Gammell told reporters at Petrotech 2005 even as he did not rule out arbitration on the issue of cess payment.

The BG Group, which bought out Enron in the Panna, Mukta and Tapti oil and gas fields a few years ago but got caught in negotiations over operatorship rights with other partners, plans to make fresh investment. Along with ONGC and Reliance Industries Ltd, it would invest $750 million to target new reserves and expand current production.

Total Gas & Power Managing Director Jean Pierre Junqua raised some of the issues that the private players would want sorted out.

He said the government should address the issue of different sales tax on gas and regasified LNG besides seeking flexibility to source LNG from the cheapest source.

Junqa also sought deregulation of gas prices and increasing the pace of reforms in the fertiliser and power sectors, which are consumers of LNG.

While complaining of the lack of stable and transparent policy, the international players in the gas business also want an independent regulator to be in place to allow third party access.

BG's share in investment for Mukta/Panna and Tapti would be $250 million. It would take its investment in India to $750 million.

"We plan to raise this to $1 billion," BG group chief executive Frank Chapman said at the conference.

The investment includes $190 million in increasing crude oil production from Panna/Mukta field by 10,000 barrels per day to 40,000 barrels per day and gas production by 0.5 million standard cubic metre per day to 4.5 mmscmd by second half of 2006.

"Our objective in India is of developing a gas market and supplying natural gas to consumers. Owning an LNG terminal is not end purpose but supplying gas at competitive price is," Chapman said.