The Hindu : Business : BG Group keen to pick up stake in ONGC deep sea fields

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Tuesday, Feb 12, 2008
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BG Group keen to pick up stake in ONGC deep sea fields

Sujay Mehdudia

NEW DELHI: Britain’s BG Group is understood to have expressed its keenness to pick up stake in the State-run Oil and Natural Gas Corporation’s (ONGCs) Krishna Godavari and Mahanadi basin deep sea oil and gas blocks off the East Coast.

Official sources said BG had expressed interest to take 30 per cent interest in KG basin Block KG-DWN-98/4, which ONGC had won in the first round of auction under the New Exploration Licensing Policy (NELP) and 25 per cent in Mahanadi basin Block MN-DWN-2002/2 that ONGC had won in NELP-IV. If the deal happens, the cost of exploration and production would be shared between ONGC and BG in the ratio of their participating interest, while BG would also share the past exploration cost incurred by ONGC in proportion to its shareholding.

For Block KG-DWN-98/4 that sits next to Reliance Industries’ gas rich KG-DWN-98/3 or KG-D6 block, BG would bear ONGC’s share of forward exploration expenditure to the extent of $15 million. Past exploration costs for Block KG-DWN-98/4 would be paid by BG on declaration of commerciality while the same for Block MN-DWN-2002/2 would be paid on approval of stake buy by the government.

Besides, discovery bonus at a rate of $1 a barrel of oil in the case of oil find and $0.50 a barrel of oil equivalent of gas discovery would be paid by BG on its share of recoverable reserves on commencement of commercial production.

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