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ONGC in talks with ExxonMobil, others for KG basin block

ONGC in talks with ExxonMobil, others for KG basin block
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First Published: Thu, Apr 15 2010. 12 30 PM IST
Updated: Thu, Apr 15 2010. 12 30 PM IST
New Delhi: Oil and Natural Gas Corp (ONGC) is in talks with supermajors like ExxonMobil to replace Norway’s Statoil and Petrobras of Brazil who have decided to quit its KG basin gas block.
“We are talking to a lot of people,” ONGC chairman and managing director R.S. Sharma said.
The companies ONGC is talking to includes Exxon but Sharma refused to divulge details.
“We are looking at firms for technology (to produce gas from ultra deep sea) and risk sharing,” ONGC director (Finance) Dinesh K. Sarraf said.
The two specialist in deep-sea production technologies decided to quit block KG-DWN-98/2 due to government delays in approving their participation in the deepwater acreage.
Petroleo Brasileiro SA or Petrobras, Brazil’s state-controlled oil firm, has offered ONGC its 15% interest in the Krishna Godavari basin block that sits next to Reliance Industries prolific KG-D6 fields without any cost.
Similarly, Statoil has decided against participating in future drilling in the acreage off the Andhra coast.
This follows apparent unwillingness of the Petroleum Ministry and its technical wing DGH to accord approvals for equity participation by foreign companies and the inordinate delays in clearing the drilling programmes.
ONGC now wants another foreign partner to share risks in developing the acreage, which is estimated to have an in-place gas reserve of 14 trillion cubic feet.
The state-owned firm does not have the production technology to produce gas from such water depth in the geologically hostile KG basin.
ONGC, a few years back, had bought 90% stake in the block from Cairn India. In 2007, it farmed out 15% interest in the block to Petrobras and 10% to Norsk Hydro (now StatoilHydro).
Cairn India currently has 10% stake in the block while ONGC has 65% interest.
The block now has 10 discoveries and appraisal drilling is now required to be carried out to assess the potential before finalising development of gas fields.
Sharma said gas production from the KG block will begin in 2015-16, instead of 2013 as anticipated earlier.
Peak output from the field is seen at 20-25 million standard cubic meters per day, he said.
Sharma had previously written to oil secretary saying red tapism was making international oil majors apprehensive about sharing exploration risks in acreages where they pick up stake.
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First Published: Thu, Apr 15 2010. 12 30 PM IST
More Topics: ONGC | ExxonMobil | KG Basin | Cairn India | Petrobras |