The Hindu : Business : ONGC-Shell tie up in oil and gas sector

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Friday, Jan 20, 2006

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ONGC-Shell tie up in oil and gas sector

Special Correspondent

MoU covers joint development of coal bed methane gas

NEW DELHI: The Oil and Natural Gas Corporation (ONGC) and Royal Dutch Shell have entered into a wide-ranging tie-up in the hydrocarbons sector envisaging collaboration in oil and gas exploration and production both within India and abroad.

The new memorandum of understanding signed here on Thursday also covers joint development of coal bed methane gas, export of petroleum products from the ONGC subsidiary, MRPL, manufacture of high grade bitumen and possible cooperation in petrochemicals.

The cooperation between the two oil giants has raised prospects of Indian participation in Shell's overseas projects including Sakhalin II in Russia.

According to ONGC Chairman Subir Raha, there is also a possibility of the Dutch company's participation in the MRPL's new refinery and petrochemicals projects.

Describing it as a landmark pact, he said ONGC might pick up an equity stake in Shell's LNG import terminal in Gujarat. Besides, the prospects of setting up a C2 extraction plant at Hazira might be considered, he said.

Speaking to newspersons after signing the MoU, Mr. Raha said ONGC was considering the possibility of taking a stake in Sakhalin II being operated by Shell.

At present ONGC had a 20 per cent equity share in Sakhalin I and gas from the two projects could be tied up to make shipments viable. The chairman of Shell India, Vikram Singh Mehta, said since Shell was not present in the upstream business in India, the agreement would fill the gap. He said the MoU provided for studying potential for collaboration in various areas, including Shell's equity participation in future projects.

Petroleum Minister Mani Shankar Aiyar, who was present on the occasion, said the agreement would network the Shell's immense knowledge base with ONGC's knowhow to bring to the fore innovation needed in discovering new oil and gas in India.

He pointed to the need to exponentially increase domestic production of oil and gas even if acquisition of overseas properties looked attractive.

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