Statoil and Petrobras, specialists in deep-sea production technologies, decided to quit block KG-DWN-98/2 due to government delays in approving their participation in the deepwater acreage
Oil and Natural Gas Corp (ONGC) is in talks with majors like ExxonMobil to replace Norway’s Statoil and Petrobras of Brazil who have decided to quit its KG basin gas block, reports PTI.
“We are talking to a lot of people,” ONGC chairman and managing director RS Sharma said.
Mr Sharma refused to divulge more details.
“We are looking at firms for technology (to produce gas from ultra-deep sea basins) and risk sharing,” ONGC director (finance) Dinesh K Sarraf said.
The two specialists in deep-sea production technologies decided to quit block KG-DWN-98/2 due to government delays in approving their participation in the deepwater acreage.
Petroleo Brasileiro SA or Petrobras, Brazil's State-controlled oil firm, has offered ONGC its 15% interest in the Krishna Godavari basin block that sits next to Reliance Industries’ prolific KG-D6 fields, without any cost.
Similarly, Statoil has decided against participating in future drilling in the acreage off the Andhra coast.
This follows apparent unwillingness of the petroleum ministry and its technical wing DGH to accord approvals for equity participation by foreign companies and the inordinate delays in clearing the drilling programmes.
ONGC now wants another foreign partner to share risks in developing the acreage, which is estimated to have an in-place gas reserve of 14 trillion cubic feet.
The State-owned firm does not have the production technology to produce gas from such water depth in the geologically hostile KG basin.
ONGC, a few years back, had bought 90% stake in the block from Cairn India. In 2007, it farmed out 15% interest in the block to Petrobras and 10% to Norsk Hydro (now StatoilHydro).
Cairn India currently has 10% stake in the block while ONGC has 65% interest.
The block now has 10 discoveries and appraisal drilling is now required to be carried out to assess the potential before finalising development of gas fields.
Mr Sharma said that gas production from the KG block will begin in 2015-16, instead of 2013 as anticipated earlier.
Peak output from the field is seen at 20-25 million standard cubic metres per day, he said.
Mr Sharma had previously written to the oil secretary saying “red-tapism” was making international oil majors apprehensive about sharing exploration risks in acreages where they pick up stake. “Although the farm out agreements with Petrobras and Statoil were signed in August-September, 2007, the Joint Operating Agreement (JOA) could not be signed with both these companies, initially, due to nine months taken in obtaining approval on assignment of participating interest, and then one year in signing amendment to the Production Sharing Contract (PSC) from various parties, including (the) government,” he wrote.
Mr Sharma also pointed out to delays in other blocks. In case of deepwater block CY-DWN-2001/1 in the Kaveri basin, amendment to the PSC duly signed by ONGC, Oil India and Petrobras was submitted for signing by the government in January 2009. “The same is yet to be signed by the government,” he said.
Mr Sharma said that Petrobras quit the block because of “uncertainties about gas pricing and tax holiday (agreement).”