Mumbai: State-owned oil exploration major Oil and Natural Gas Corp. Ltd (ONGC) and the Mumbai-based Hinduja Group which has interests in the automobile, banking, and IT businesses are in discussions over a possible collaboration in the area of oil exploration.
The Hinduja group has been trying to get a toehold in the booming Indian oil exploration sector, while ONGC has been talking about offloading stakes in its exploration blocks in the Krishna-Godavari basin.
Seeking partners: R.S. Sharma, chairman and managing director of ONGC.
“We are talking about a lot of things—oil exploration is one of them. The details have not been finalized yet,” said R.S. Sharma, chairman and managing director of ONGC.
ONGC has previously said that it plans to sell up to 50% of the 90% stake in its blocks in the Krishna-Godavari basin. The Hindujas, according to sources close to the development, are interested in buying part of this. A spokesperson for the Hinduja Group declined to comment on the issue.
ONGC and the Hinduja Group have been discussing collaborating on a new refinery, with a capacity to process 15 million tonnes (mt) of crude a year that will come up at Kakinada in Andhra Pradesh. ONGC currently holds a 49% stake in the export-oriented refinery along with its subsidiary Mangalore Refinery and Petrochemicals Ltd.
The Hinduja Group is expected to pick up a 26% stake in the venture. The Hindujas will also source oil for the refinery from Iran, Sharma said.
In November 2006, ONGC and the Hinduja Group inked a deal to collaborate in the exploration and production business as well as pursue global opportunities in the marketing of liquefied natural gas (LNG). However, the deal did not go through after government directors on the board of ONGC opposed it.
Ongoing discussions between the two companies include possible partnerships for exploring blocks in West Asian countries such as Abu Dhabi and Oman as well as Libya in north Africa, according to people familiar with the discussions.
Earlier, ONGC had announced it was looking for blocks in West Asia and Africa.
It already has a joint venture with Mittal Investments Sarl, the Luxembourg-based holding company for the LN Mittal Group, ONGC Videsh Mittal Energy Ltd (OMEL) for oil exploration. Earlier this month, OMEL acquired a 30% stake in a block in Turkmenistan, its fourth so far.
However, another ONGC-Mittal Investments joint venture, ONGC Mittal Energy Services Ltd (OMESL) that was set up to trade in oil and gas, has all but folded up with OMESL chief S.K. Sharma joining Mittal Investments.