The Hindu Business Line : ONGC, Italy's ENI to go for asset swap

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New Delhi Feb. 12 Oil and Natural Gas Corporation (ONGC), which is looking for better technological expertise to increase output from its oil and gas fields as well as for acquiring more assets abroad, is set to strike the first asset swap deal with Italy's ENI on Wednesday.

This, in effect, would mean that ONGC would, for the first time, offer participating interest to a foreign company in its assets held here in exchange of the overseas player offering shares to it in its assets abroad.

A senior ONGC executive said that the state-owned company is set to acquire about 20-25 per cent stake in a Congo oil block held by ENI in a swap for 30-35 per cent stake in ONGC's Mahanadi basin block. An agreement to this effect is likely to be signed on Wednesday between ONGC Videsh Ltd, the overseas arm of ONGC, and ENI.

The official told Business Line: "We are offering a participatory interest to ENI in our deepwater block in Mahanadi basin; in turn they are giving us stake in their deepwater block in Congo.'' Elaborating on the tie-up, the official said, it would be advantageous for ONGC as far as risk sharing and technological expertise are concerned. Besides, ENI is also likely to share some part of the Indian major's investments in the field. He, however, declined to give any figures for the financial investment.

When asked how asset swapping would benefit domestic exploration companies, Mr D.K. Pande, Director (Exploration) said, "We are open to exploring such opportunities if they add value, have technology for deepwater exploration, and are ready to share our risks.''

Mr D.K. Pande said: "It would also depend on whether the foreign companies could provide us some percentage in properties of our choice. ONGC is also seeking ways to bring foreign expertise into the exploration areas that it holds in India, and where new technology is needed for production of hydrocarbons."

This asset swap deal with ENI is the outcome of the memorandum of understanding signed between the two entities in early 2006.ONGC had entered into an MoU with ENI for exchanging information in a wide range of exploration opportunities in India and overseas and be a strategic partner with modern technology, specially in deep water exploration and development.

Drilling rigs

Talks between ONGC and ENI will also focus on sharing deepwater drilling rigs. ENI holds a 60 per cent stake along with operatorship rights in the deepwater block Mer Tres Profonde Nord in the Republic of Congo, while ExxonMobil has the remaining 40 per cent stake. ONGC is the operator of the Mahanadi deepwater Block MN-DWN-2002/1 with a 70 per cent stake, Oil India Ltd has 20 per cent and Bharat Petroleum Corporation has 10 per cent. The Mahanadi basin block that ONGC is offering to ENI was acquired by it under the New Exploration Licensing Policy (NELP) rounds. The state-owned company has a number of blocks in the Mahanadi basin. There are eight blocks under NELP — seven in offshore and one onshore.

ONGC and ENI are already working together in Rajasthan and Andaman islands, in blocks awarded under NELP V.

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