NEW DELHI - India's state-run Oil & Natural Gas Corp. Friday signed an initial agreement with ConocoPhillips to screen opportunities for jointly exploring and developing shale-gas reserves in India and North America and deep-water blocks along India's east coast.
"ConocoPhillips is engaged in the hunt for oil and gas for many years and have developed an expertise in deepwater exploration and exploitation," ONGC Director Exploration S.V. Rao said at a news conference in Mumbai, held to announce the joint partnership. "They have a rich experience in shale gas exploration and exploitation and have achieved commendable success."
Indian exploration companies have sought partnerships with overseas oil and gas majors to gain access to technology that will help them increase output and to expand their geographical footprints.
Reliance Industries Ltd., for example, last year sold a 30% stake in 21 exploration blocks in India to BP PLC, including the massive D6 block offshore India's east coast, where Reliance is fighting a plunge in gas output.
The ONGC-ConocoPhillips agreement on shale gas mirrors recent developments in China, where Western energy majors have scrambled to enter pacts with local companies. On March 21, Royal Dutch Shell PLC and China National Petroleum Corp., China's largest energy producer, signed an agreement to develop shale-gas reserves in Sichuan province.
The pact with ConocoPhillips comes as ONGC, India's flagship explorer, tries to arrest a fall in domestic production. ONGC accounted for 65% of crude-oil production and 44% of natural gas output in India in the financial year ended March 2011.
However, ONGC's crude-oil output declined 6.3% over four years--to 24.42 million tons, or 488,400 barrels a day, in the year ended March 31, 2011, from 26.05 million tons, in the year ended March 31, 2007.
The company hasn't been able to bring any new major field into play in the past three decades.
ONGC seeks ConocoPhillips technology for deepwater exploration and has given a list of 19 blocks to the explorer for studying, Chairman Sudhir Vasudeva told reporters.
ConocoPhillips' Global Chief Geosciences, Exploration and Business Development, James Handschy said the company was open to offering a stake to ONGC in its projects and that the explorer may open an office in India and hire people.
India's exploration companies are seeking equity stakes in overseas shale-gas projects and partnerships with field experts ahead of the first round of bidding for shale blocks in India, expected by end-2013.
U.S. Energy Information Administration has estimated India's recoverable shale-gas reserves could be 69 trillion cubic feet in four basins.
Copyright (c) 2012 Dow Jones & Company, Inc.
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