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ONGC to sell 30% stake in K-G block

16 Jun 2011 Evaluate

Nearly four months after Reliance Industries Limited (RIL) signed a deal with British Petroleum (BP) for getting BP’s technology for deep-sea exploration, state-run Oil and Natural Gas Corporation (ONGC) is in talks with BG Exploration and Production, India, and Italian exploration and production major, ENI, to sell up to 30 per cent stake in its Krishna-Godavari DWN 98/2 block. Cairn India is already a 10 per cent partner in the block.

The block is right next to the KG-D6 block of RIL in the K-G basin, off the east coast.RIL in February sold 30 per cent stake in 23 of its oil and gas blocks to BP for $7.2 billion, as part of a long-term deal that involves a total investment of $20 billion.The discoveries in KG-DWN-98/2 and three in adjacent blocks together hold 6.37 trillion cubic feet (tcf) of in-place reserves. RIL’s KG block holds in place reserves of 11.3 tcf. ONGC, along with its partners, plans to spend around Rs 36,000 crore on developing the block.

KG-DWN-98/2, which has 10 gas discoveries, was awarded under the New Exploration Licensing Policy, which allows ONGC to farm out a participating interest (equity stake) to foreign firms. ONGC plans to tie up its KG basin discoveries with six gas finds in neighbouring 1G block and is seeking approval from the oil ministry. The ministry, however, is taking time to grant approval. Block 1G was given to ONGC on nomination basis. It cannot sell stake to any firm and can at best involve a foreign firm as a service contractor.ONGC has partnership with BG India in three blocks in KG offshore, two operated by ONGC and one operated by BG. Petrobras and ENI have also partnership in one block each.crackcrack

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