ONGC to buyout BG stake in 3 oil and gas exploration blocks
BG Group will pay about USD 50 million to ONGC toward settlement of past costs that the state-owned firm incurred on its behalf in the three blocks, ONGC Director (Exploration) S V Rao said.
State-owned Oil and Natural Gas Corp (ONGC) will buyout British energy major BG Group's stake in three of its eastern offshore oil and gas exploration blocks, company Chairman and Managing Director Sudhir Vasudeva said on Wednesday.
ONGC will buy BG Group's 45 per cent participating interest in Krishna-Godavari Basin block KG-OSN-2004/1, 25 per cent interest in exploration block MN-DWN-2002/02 in the Mahanadi Basin and 30 per cent stake in deep water block KG-DWN-98/4.
"Our board has approved the proposal to acquire BG Group's stake in three blocks," he told reporters.
While it is ONGC which is buying BG's stake in the three blocks, no cash will be transferred from its side. Instead, it will get cash in lieu of past liabilities of the British group in the blocks.
BG Group will pay about USD 50 million to ONGC toward settlement of past costs that the state-owned firm incurred on its behalf in the three blocks, ONGC Director (Exploration) S V Rao said.
BG and ONGC had won the 1,131 sq km KG-OSN-2004/1 block under the sixth round of the New Exploration Licencing Policy (NELP) in 2006. ONGC, which held a 55 per cent in the block, would have a 100 per cent stake after the transaction in the block, where one well was spud last year.
In 2008, BG Group had farmed into ONGC's 5,895 sq km MN-DWN-2002/02 block and KG Basin deepsea block KG-DWN-98/4.
Rao said the KG-DWN-98/4 block has been relinquished as the two firms could not find any commercially exploitable hydrocarbon reserves.
ONGC would hold a 100 per cent interest in the remaining two blocks after the BG stake buy.
After the exit from the three blocks, BG is now left with just one exploration property -- the KG-DWN-2009/1 deepwater block in the KG basin -- which it won alongside ONGC and Oil India in the 8th NELP round in 2010.
BG holds a 30 per cent stake in the block, while ONGC has 45 per cent, OIL 15 per cent and AP Gas Infrastructure the remaining 10 per cent.
The British group also holds a 30 per cent stake in the Panna/Mukta and Tapti oil and gas fields off the West Coast. ONGC has 40 per cent in the producing fields and Reliance Industries the remaining 30 per cent.
Vasudeva said BG was exiting the blocks as part of its global portfolio alignment strategy and added that ONGC thought the blocks were prospective.
Incidentally, BG Group has also put its 65.12 per cent stake in Gujarat Gas Co Ltd, which retails CNG and piped gas in Gujarat, on the auction block.