The Hindu Business Line : ONGC ready to rope in Petrobras, Statoil

Kolkata, July 15 Having set the stage to rope in Petrobras of Brazil and Statoil Hydro of Norway as strategic partners in its hydrocarbon rich KG-DWN-98/2 block in October 2007, ONGC is still waiting for the Union Government to approve the deal. Sources feel that the delay may impact the Indian oil and gas major’s plan to develop the KG asset on a fast track basis.

The foreign partners are expected to offer the much-needed technical and logistics support to ONGC in developing its first major discovery — that too in ultra-deepwater — in recent years and help explore the residual areas of the block In April this year, the management committee under the Petroleum Ministry allowed ONGC to go ahead with a programme aimed at establishing commerciality and developing the approximately 2-tcf hydrocarbon potential in UD1 discovery and explore the possibility of enhancing the reserve by way of further ultra-deepwater and deepwater drilling.

Though ONGC official sources claim that the company would not wait for the foreign partners to go ahead with the appraisal plan and would soon re-enter the UD1 discovery, sources told Business Line that the foreign partners were expected to play a vital role in devising the drilling strategies and even in sourcing suitable rigs.

Possible embarrassment

Interestingly, sources say that based on the assurance given by ONGC both the companies have already accounted for the project. While Petrobras and Statoil could not be contacted, sources say that under this circumstance, it might not be possible for the proposed partners to wait for too long for the approval.

Considering ONGC’s previous experiences with regard to proposals for farming out stakes to strategic partners such as British Gas, British Petroleum and BHP Billiton, where approvals were denied after prolonged delay, the present crisis may add to its embarrassment before the global E&P fraternity. This fear is confirmed by an ONGC source as well. “Having convinced Statoil and Petrobras to pick up participatory stakes and share our risks as well, we are cutting a sorry figure before them,” a source said.

ONGC currently holds 90 per cent operating stake in the block and Cairn holds 10 per cent interest. The proposed farm-out of 15 per cent to Petrobras and 10 per cent to Statoil would reduce ONGC’s operating interest to 65 per cent.

Related Stories:
Brazil's Petrobras enters India with ONGC
ONGC plans to rope in Brazil's Petrobras for KG Basin
Petrobras, ONGC to partner for exploration activities

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