ONGC Rejects BG Offer
ONGC has rejected a bid by BG Plc to become the operator of three valuable oil and gas fields off India's west coast, according to ONGC. The decision could jeopardize the BG's $388-million deal to buy a 30 percent stake in the fields from Enron Corp.
The deal which was signed in October, was conditional on BG becoming the operator of the fields with full control over day-to-day management.
The ONGC board, which met late on Tuesday evening, decided that BG's offer was not "sufficiently responsive" for it to become the operator of the fields, stated ONGC. Details on the reasons for rejection were not provided.
ONGC's move could also affect Enron, which desperately needs cash to stave off a mounting debt crisis in the United States. The Panna, Mukta and Tapti fields were jointly owned by ONGC, Enron Oil and Gas India Ltd, and Reliance Industries Ltd. The Panna-Mukta oilfields have recoverable reserves of 184 million barrels of oil and oil equivalent gas. There is a proposal to expand them to 214 (MMBOE). The Tapti gas field has reserves of 96.3 billion cubic meters of gas equivalent.
Enron, with a 30 percent interest, was the sole operator, and BG wanted to continue as operator after the buyout. But this was opposed by ONGC and Reliance. Both companies staked their own independent claims, saying that they had the expertise to manage the fields on their own. BG then tried to solve the dispute by offering ONGC the right to operate another field in Brazil if it withdrew its claim for Panna, Mukta and Tapti.