ONGC To Acquire Cairn's Stake in Two Offshore Blocks

ONGC will acquire Cairn Energy's interest in two exploration blocks in the Bay of Bengal and Gulf of Cambay for about $100 million. ONGC will acquire Cairn's 85 percent stake in deepsea block KG-DWN-98/2 in the Krishna Godavari Basin off the Andhra Pradesh coast, and shallow water CB-OS/2 block off the Gujarat coast, according to industry sources.

Cairn had earlier offered to sell its 85 percent stake in blocks KG-DWN-98/2 and KG-OS/6 (also in KG Basin) for $100 million and a 15 percent interest in two blocks which ONGC won under the New Exploration Licensing Policy (NELP) rounds. However, ONGC was not interested in KG-OS/6 block and wanted only KG-DWN-98/2 which lies next to Reliance Industries' gigantic gas find.

Besides KG-DWN-98/2, ONGC also wants to buy out the Cairn's stake in Cambay basin block CB-OS/2, where five oil and gas discoveries have been made to date. Cairn in its offer of sale had not indicated the Gujarat offshore block CB-OS/2. "Together with CB-OS/2, ONGC has offered Cairn around $100 million," sources said adding the deal came through after Cairn's CEO Bill Gammell met ONGC managing director Subir Raha last week. ONGC's non-interest in KG-OS/6 stems from the fact that the exploration license of the Andhra offshore block would be expiring in next 6 months.