ONGC chairman R.S. Sharma (right) in New Delhi on Wednesday. (PTI)

New Delhi, Sept. 19: The Oil and Natural Gas Corporation (ONGC) today said it was mulling a share split and a bonus issue. The PSU, however, did not give any time frame for the investor-friendly move.

ONGC chairman R.S. Sharma said the aim was to benefit small shareholders who might not be able to buy the PSU’s shares at current prices.

Shares of the company gained 5.9 per cent to Rs 901.05 on news of the proposed share split and the bonus issue.

Sharma reiterated the PSU’s claim of significant reserves at its gas blocks in the Krishna-Godavari basin. The directorate-general of hydrocarbons (DGH), the regulator for the upstream oil sector, had earlier said the finds were “speculative”.

The ONGC chairman said the blocks “may yield about 15 million cubic metres of gas daily from 2012”.

An update on reserves in the gas blocks will be submitted to the DGH by this month.

Officials said the update will be on the “six or seven new finds in the block. Naturally, the total reserve size in the block is set for an upward revision”.

In 2006, the ONGC said the blocks held 21 trillion cubic feet (tcf) of gas reserves.

However, the DGH trimmed it to 2.09 tcf. The regulator said the PSU did not follow the conventional method of testing to establish the reserves.

The company will invest $4.5-5 billion in developing the Krishna-Godavari blocks by 2012-13.

ONGC also sought 27 per cent more for its gas to fund new explorations and thwart competition from private sector rival Reliance.

“The company should be allowed to increase the price to $2.5 per million British thermal units from $1.97,” said Sharma.

If the government approves the hike, the ONGC will add Rs 2,000 crore to its revenues.