ONGC, BG India tie up to operate blocks

Oil & Natural Gas Corporation's will now jointly operate it's three deepwater blocks in the highly-prospective Krishna-Godavari basin with BG India. The two companies have finalised contract terms and will be signing an agreement shortly.

This will be the first tranche of ONGC blocks to be opened up for private companies under the government's policy under which private players are allowed in ONGC-held nomination blocks to get better technological inputs.

"BG has experience in deepwater exploration and this will help us in getting better technology to the country," said an ONGC executive.

Senior executives told Business Standard, it would be 50:50 partnership wherein ONGC would retain the ownership of the block though the two companies would make equal investment and be joint operators as in the case of Panna, Mukta and Tapti fields where ONGC, BG and Reliance take turns in operating the fields.

The government had given these blocks on nomination basis to ONGC in 1999, on the terms of new exploration and licensing policy which was introduced that year.

ONGC has access to the seismic data and has done exploratory studies for these blocks, KG-OS-DW, KG-OS-DW Extension and KG-OS-DW 3.

Besides these, ONGC had put two more blocks on offer along with the fifth round of NELP concluded earlier this year. The remaining two blocks did not attract any bidder.

ONGC had shortlisted six companies for the blocks including BP, BG, Petrobras of Brazil, Petronas of Malaysia, United States-based Anadarco and BHP Billiton of Australia and had asked them to submit bids by September 6. However, only BG submitted bids for the three KG basin blocks.

Besides the three KG blocks, ONGC had offered one block in Kerala Konkan offshore and one in Gujarat Kutch. The offer was made at the terms laid down by the New Exploration and Licencing Policy (NELP), though in farm-in contracts, ONGC would retain the right over blocks.

Blocks held by ONGC have been opened up to private investment under the previous governments. These include the Ravva fields, Panna-Mukta-Tapti and the Cairn Energy-operated RJ-ON-90/1 block in Rajasthan.

Cairn holds 100 per cent of the Rajasthan block while Oil & Natural Gas Commission has right to 30 per cent of any development area resulting from a commercial discovery since it is the original holder of the block.