The Hindu Business Line : ONGC, BP in pact for exploration, production biz

New Delhi, Aug. 31 ONGC has entered into a memorandum of understanding (MoU) with global oil major, BP, to collaborate in exploration and production (E&P) business in India and abroad, which include sharing of knowledge in coal-bed methane (CBM) and deepwater activities. This tie-up with BP comes close on the heels of ONGC joining forces with Italy’s ENI, Brazil’s Petrobras, and Norwegian Norsk Hydro, for related activities.

Sign pact

The two entities inked an MoU on Friday. The pact is valid for an initial period of 18 months, which can be extended further by mutual agreement of the two corporations, the company said.

According to ONGC, the MoU envisages possible participation in each other’s acreages in India and abroad, including offshore licences and the CBM acreages in India. It also provides for joint bidding by ONGC and BP for oil and gas exploration acreages in India and abroad.

Joint bidding

According to a senior ONGC official, the two will go for joint bidding in new acreages as well as consider participation in the existing acreages. This would be an umbrella MoU and subsequently, depending on specific cases, the two will be entering into understandings.

The official told Business Line that the MoU also envisages that BP would be extending technical support to ONGC in its exploration activities in the Kutch Basin. The two will do geological modelling and complete data analysis of bo th onshore and offshore prospects in the region. BP would bring in its expertise in the region from the Pakistan side.

ONGC has been trying to rope in BP in its GK-DW-1 block in the Kutch region, which was awarded to the state-owned company on nomination basis. 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.

Joint study

The official indicated that the two entities propose to study the prospects in the block for a year and go back to the Government again. If the Government agrees, then ONGC would rope in BP as a partner, otherwise it would be offered in the next NELP round. Both BP and ONGC have been trying to seek the Petroleum Ministry’s approval for strategic tie-up for GK-DW-1 block in the Kutch basin where the two have already chalked out a work programme.

Any future commercial participation, as per BP, will be based on the results of this study.