Oil and Natural Gas Corp (ONGC) is in talks with super majors like ExxonMobil to replace Norway's Statoil and Petrobras of Brazil who have decided to quit its KG basin gas block.
"We are talking to a lot of people," R S Sharma, chairman and managing director, ONGC said. The companies ONGC is talking to includes Exxon but Sharma refused to divulge details.
"We are looking at firms for technology (to produce gas from ultra deep sea) and risk sharing," Dinesh K Sarraf, ONGC Director (Finance) said. The two specialist in deep-sea production technologies decided to quit block KG-DWN-98/2 due to government delays in approving their participation in the deepwater acreage.
Petroleo Brasileiro SA or Petrobras, Brazil's state-controlled oil firm, has offered ONGC its 15 per cent interest in the Krishna Godavari basin block that sits next to Reliance Industries prolific KG-D6 fields without any cost.
Similarly, Statoil has decided against participating in future drilling in the acreage off the Andhra coast. This follows apparent unwillingness of the Petroleum Ministry and its technical wing DGH to accord approvals for equity participation by foreign companies and the inordinate delays in clearing the drilling programmes.
ONGC now wants another foreign partner to share risks in developing the acreage, which is estimated to have an in-place gas reserve of 14 trillion cubic feet.
The state-owned firm does not have the production technology to produce gas from such water depth in the geologically hostile KG basin. ONGC, a few years back, had bought 90 per cent stake in the block from Cairn India.
In 2007, it farmed out 15 per cent interest in the block to Petrobras and 10 per cent to Norsk Hydro (now StatoilHydro).
Cairn India currently has 10 per cent stake in the block while ONGC has 65 per cent interest. The block now has 10 discoveries and appraisal drilling is now required to be carried out to assess the potential before finalising development of gas fields. Sharma said gas production from the KG block will begin in 2015-16, instead of 2013 as anticipated earlier.
Peak output from the field is seen at 20-25 million standard cubic meters per day, he said. Sharma had previously written to Oil Secretary saying red tapism was making international oil majors apprehensive about sharing exploration risks in acreages where they pick up stake.
Although the farm out agreements with Petrobras and Statoil were signed in August September, 2007, Joint Operating Agreement (JOA) could not be signed with both these companies, initially, due to 9 months taken in obtaining approval on assignment of participating interest, and then one year in signing amendment to the Production Sharing Contract(PSC) from various parties, including government," he wrote.
Sharma also pointed out delays in other blocks. In case of deepwater block CY-DWN-2001/1 in Cauvery basin, amendment to the PSC duly signed by ONGC, Oil India and Petrobras was submitted for signing by the government in January 2009.
"The same is yet to be signed by the government," he said. "It would kindly be appreciated that such delays lead to doubts and uncertainties.
"International oil companies have been expressing anxieties and apprehensions for such delays," he wrote.
Withdrawal by the majors without participating in any activity in the block is bound to send ripples in the industry and jeopardise the initial gains of India in the NELP era as E&P destination. Sharma said Petrobras quit the block also because of uncertainties about gas pricing and tax holiday.
