By the end of July, ONGC will forge a partnership with either an American or French mid-sized company for its East Coast ultra deep gas find.
“Talks are at an advanced stage for the KG-DWN-98/2 oil and gas block. The target is to close the equity partnership with either one of them by the end of July,” sources privy to the development said.
They did not, however, disclose the names of the potential partnersas it would be a breach of commitment, only qualifying them as independent mid-sized companies that have work experience in South-East Asia.
ONGC maintained that if the deal doesn’t work out, it will continue with its activities. “We don’t need technology for exploration, but for bringing the deepwater finds to production with cost effectiveness,” a company official reiterated.
The domestic oil major’s East Coast discovery UD-1 is the deepest gas discovery ever made in the country. ONGC estimates it may hold 4.257 trillion cubic feet (tcf) of in-place gas reserves.
The Directorate General of Hydrocarbons (DGH) has accepted the Declaration of Commerciality but with lower in-place volumes of 3.938 tcf.
Of the in-place reserves, ONGC estimates 2.55 tcf can be recovered while DGH puts the figure at 2.315 tcf.
Asked if ConocoPhillips has shown interest in the 98/2 block, sources said that the company has evinced interest in some other blocks.
ONGC had written to 13 international companies, mainly from the US and Australia, for a proposed partnership. The data room in Delhi was opened on October 17 for the companies to assess the acreage, with interest shown in six-seven blocks.
For the KG-DWN-98/2, ONGC received a three-year moratorium to finish its exploratory work in the block by next year. Fast-track monetisation of its acreages is the main focus of the company. Many of the blocks on offer are largely unchartered, ultra-deepwater acreages.
The State-owned ONGC has often been reprimanded for its low success rate compared to its competitors in the private sector.
Earlier, attempts by ONGC to invite foreign players for equity participation in exploration blocks met with little success. Global majors such as Exxon, BP and BG had also displayed interest in partnering with firm but talks did not materialise.
Currently, most of ONGC's production comes from ageing fields and the Mumbai High offshore.