ONGC Expects Government Approval for KG Basin Plan Soon

MUMBAI, March 4, 2008 (Dow Jones Newswires)

India's state-owned Oil & Natural Gas Corp. expects approval from the national petroleum and natural gas regulator on its plan for the Krishna-Godavari basin soon, the company's chairman and managing director said Tuesday.

"We have submitted the appraisal plan to the regulator (Directorate General of Hydrocarbons) for the KG Basin cluster, and our estimate of the reserves is 6.76 trillion cubic feet of gas. We expect their approval to come anytime," ONGC's Chairman and Managing Director R.S. Sharma said on the sidelines of an industry event.

The Krishna-Godavari basin, also referred to as the KG basin, is located off India's southeastern coast. It is one of the country's chief sources of natural gas and oil.

Separately, Sharma said the firm was in talks with several firms, including BP PLC, for joint development of the KG basin finds.

He said the company had also signed pacts with Brazil's Petrobras, Italy's ENI and Norway's StatoilHydro ASA to jointly develop the Mahanadi Basin, also located off the country's eastern coast.

Sharma said ONGC was in talks with over a dozen firms to act jointly in the next round bidding for hydrocarbon exploration blocks designated as New Exploration Licensing Policy VII. Speaking on the firm's share of the national oil subsidy pie, Sharma said ONGC had estimated its subsidy payout for the fourth quarter ending March 31, 2008 at INR65 billion.

"In the first three quarters of the fiscal year, the subsidy payout amounted to INR135 billion and for the present quarter, we estimate an additional INR650 billion of subsidy outgo," he said.

ONGC sells crude to other state-owned oil marketing firms at a discount to enable them to limit their losses from selling fuel at artificially low prices as part of a government-mandated populist measure to keep inflation in check.

MUMBAI, March 4, 2008 (Dow Jones Newswires)