NEW DELHI (Dow Jones Newswires), May 19, 2010
Exxon Mobil, BG Group, BP and Eni are seeking to buy a stake in an oil and gas block leased by Oil & Natural Gas, India's flagship oil producer.
ONGC has asked them to submit their proposals by May 31, D.K. Pande, the state-run company's director in charge of exploration, told Dow Jones Newswires.
Buying a stake in the KG-DWN-98/2 block off India's east coast will likely help the overseas companies get a foothold in the Krishna-Godavari basin where Reliance Industries has struck India's richest gas find so far.
ONGC has been scouting for partners to develop the block after Brazil's state-run Petroleo Brasileiro left the block's developer group and Norway's Statoil expressed its willingness to exit. Cairn Energy is the other stakeholder.
BP's press officer, Robert Wine, said in an email that the company doesn't "comment on market speculation on commercial deals or license rounds."
Separately, Erika Mandraffino, who handles financial and international media relations at Eni, said "we have no comment to make at the moment."
BG Group said it can't "comment on any specific opportunities prior to making a firm decision."
Exxon Mobil said it routinely evaluates potential development opportunities around the world, but it added it doesn't comment on the details of commercial discussions.
Pande said ONGC wants the four global companies to give proposals to also provide services for some blocks close to KG-DWN-98/2 for which they will be paid.
ONGC operates the KG-DWN-98/2 block that it got through an auction. The company holds 65% of it, while Statoil and Cairn Energy own 10% each. Petrobras had a 15% stake.
The Brazilian company exited the block because of delays in getting approvals from the Indian government and also because it wanted to focus on developing bigger oil and gas finds back home, according to media reports in India.
ONGC is yet to decide on the size of the stake it will offer in the KG block, Pande said. "It is all to be negotiated," he said, adding that it is looking for technology to develop the deep-sea block.
The government offered ONGC the adjoining fields of the KG-DWN-98/2 block, and since the company can't sell stakes in them under Indian laws, it wants to develop them through service contracts, he said.
In April, ONGC Chairman R.S. Sharma said he expects to start production at KG-DWN-98/2 during 2015-16.
The oil explorer aims to ramp up output by bringing into production new fields such as this one in the KG basin, close to Reliance's D6 block.
According to the country's upstream regulator, the Directorate General of Hydrocarbons, Reliance's D6 block is estimated to have reserves of 10 trillion cubic feet and likely to generate revenue of $38.3 billion.
ONGC's crude oil output fell for the third consecutive year because of lower production at its aging fields and since it hasn't been able to bring new blocks under production. Output slid 2% in the fiscal year ended March 31 to 497,160 barrels a day.
Copyright (c) 2010 Dow Jones & Company, Inc.
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