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Richa Mishra

Murli Deora to take final decision on the issue

New Delhi March 26 British Petroleum (BP) may have to use its persuasive skills to the hilt in order to convince the Petroleum Ministry to allow it to come in as a strategic partner in ONGC's exploration block in Gujarat's Kutch basin.

Indications are that the Petroleum Ministry is unlikely to relent to the request as it is of the view that the companies envisaging interest in exploration activities should come in through the bidding process.

Both BP and ONGC have been trying to seek the Ministry's approval for strategic tie-ups for GK-DW-1 block in the Kutch basin where the two have already chalked out a work programme.

Sources told Business Line that the Petroleum Minister, Mr Murli Deora, would take a final call on the issue.

The GK-DW-1 block was awarded to ONGC on nomination basis and the exploration licence of this block is effective up to September 2009. While ONGC has agreed to take BP as its technical partner in this block, the mandatory approvals for this are yet to be accorded .

The British company has also proposed that it would like to conduct a joint technical study with ONGC, which would better define the prospects in the area. Any future commercial participation, as per BP, will be based on the results of this study.

ONGC has been looking at roping in strategic partners in these blocks.

Beneficial alliance

According to sources, this alliance would prove to be beneficial for both the partners and would offer valuable insight to ONGC in testing the hydrocarbon prospects of the Kutch basin.

Incidentally, the earlier attempts by ONGC for strategic tie-ups with British Gas and British Petroleum in the three KG basin blocks and one block in the Gujarat-Kutch basin, respectively, had met with little success. The Ministry had rejected the proposals on the grounds that no success has been achieved in exploring hydrocarbon by ONGC in these blocks. The Petroleum Exploration Licences granted to ONGC for the three KG blocks are expiring in May. The Ministry had decided to club these blocks under the seventh round of New Exploration Licensing Policy (NELP-VII). The seventh round of NELP is expected to be announced during April-May 2007.

In 2000, ONGC was granted six deepwater blocks on nomination basis. Even as the six blocks were on nomination basis — three located on the East Coast in the KG basin, two on the West Coast in Kerala-Konkan basin, and one block in the West Coast of Gujarat's Kutch basin — NELP terms were extended to it, which includes financial benefits like tax free regime and field development plans. The Government had also permitted the company to join hands with experienced exploration & production companies, subject to the approval of the empowered committee of secretaries.

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