The Hindu Business Line : Orissa block: ONGC may turn down Gazprom’s offer

ONGC may not accept Russian energy firm Gazprom’s offer to pick up 50 per cent participatory stake in its (Gazprom’s) shallow water exploration asset in the North Eastern coast off the Orissa coastline.

A consortium of Gazprom and GAIL (India) Ltd had acquired the block in NELP-I. However, GAIL surrendered its 50 per cent participatory stake in the block (NEC-OSN-97/1) following the consortium had hit two dry holes last year.

According to sources, following GAIL’s exit Gazprom had approached ONGC with a farm-in offer approximately six months ago. Both the companies previously entered agreements to jointly explore oil and gas fields in India, Russia and third countries.

While ONGC sources maintain that the Gazprom’s proposal is still under consideration, industry sources close to the development told Business Line that the Indian E&P major having a frustrating experience of exploring oil and gas in the Bengal offshore block (WB-OSN-2000/1) bordering the Gazprom asset, may not accept the farm-in offer.

Completion period

According to sources, the other major factor that had come in the way of ONGC in joining the block, is the lack of time for completion of the work programme. Having signed the production-sharing contract (PSC) in October 2000, Gazprom is reportedly pushing the end of the scheduled period for completion of the promised exploration activities in the block.

Interestingly, apart from a challenging work condition, narrow weather window, the drilling results in both the NEC-OSN-97/1 and WB-OSN-2000/1 blocks are more or less identical.

Similar to ONGC, Gazprom also witnessed a “huge kick” – apparently pointing at hitting a gas reserve – while drilling the second well, which finally tested dry.

While it is not known as yet whether Gazprom will finally relinquish the block, sources say that the Russian company is yet to initiate any campaign for drilling on further locations in the exploration asset.

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