The Hindu Business Line : ONGC not keen on higher stake for Statoil

Kolkata, Sept. 2 ONGC seems agreeable to offering operatorship of the KG-DWN-98/2 offshore block to Statoil Hydro, in view of the latter’s expertise in deep sea oil and gas exploration.

However, the company is reluctant to allow the Norwegian oil and gas major to enhance its stake in the block beyond 20 per cent, as was originally agreed. The consortium partners will meet shortly to discuss both the issues.

ONGC (65 per cent) has already established the presence of approximately 2 trillion cubic feet of gas in an ultra deepwater discovery in the block and has roped in Statoil (10 per cent) of Norway and Petrobras of Brazil as strategic partners in the block. Cairn India also holds 10-per cent participatory stake in the four-member consortium.

Sources said as per the original understanding, both Statoil and Petrobras may double their stakes to 20 and 30 per cent respectively, subject to approval of all the consortium members.

It was also decided that ONGC would be the operator during the exploration and production phases. Statoil was slated to be the operator during the development phase.

However, in a recent communication to ONGC, the Norwegian major has expressed interest in enhancing stake in the block up to 30 per cent and in taking over the operatorship from ONGC during exploration phase.

The proposal has received a mixed response from ONGC. The proven knowledge of Statoil in deep sea exploration and its access to ultra-deepwater rigs has led ONGC to take a favourable view in handing over the operatorship of the block to Statoil.

“Indian companies, including ONGC, are in their infancy when it comes to ultra deepwater exploration, that too in the tricky conditions of the eastern coast. Accordingly, it may make sense in allowing Statoil to take charge of the exploration,” an ONGC source said.

However, Statoil’s proposal for enhancement of stake is not finding much favour with ONGC as it would lead to major dilution of the company’s interest.

“We are keen to hold a clear majority stake in the block,” the source said, adding that a final view in this regard would be taken by the consortium.

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