New Delhi, March 1 (PTI): British oil and gas major BG Group Plc, India’s Oil and Natural Gas Corporation and Reliance Industries have agreed to jointly operate Panna-Mukta and Tapti oil and gas fields, ending the year-long row over who would manage the highly-profitable producing fields. The three partners, who signed an integrated joint operating framework late last night, will conduct the operations through a three-member operator board, chairmanship of which would be rotated on a two-yearly basis, sources said here.
The agreement comes at a time when the entire board of BG Group Plc is visiting India to show its commitment to invest in the country.
ONGC will have the first call on the chairmanship of the operator board, which comprises representative from each company. Reliance would take over after two years, followed by BG Group, sources said. As per the agreement, managing committee for the fields — which besides the three partners also includes government’s nodal agency DGH — would approve the operation budget and the operating board would make cash calls, within the budgeted limits, on the partners and approve future investments.
While each of the three partners have to be assigned a task depending upon the respective strengths, the contentious multi-million dollar contracts would be jointly awarded, they said.
The British firm would be in charge of operations and technical services while reliance would look after finances and commercial interests of the joint venture. Procurements and contracts would fall under ONGC’s responsibilities.
BG, which took over interim operatorship of the fields after buying Enron’s 30 per cent stake in February last year, would continue to manage the fields but would have to get the budget approved by the partners, sources said. Confirming the signing of the agreement, BG India vice-president Nigel Shaw said, “We look forward to working closely with our joint venture partners to continue the successful operation of these producing fields.”
ONGC chairman and managing director Subir Raha said, “We are happy to have reached a consensus on a transparent integrated business model and look forward to investing more in the fields to optimise the production.”
The wrangle over operatorship was costing the joint venture Rs 1.5 crore a day by way of unrealised production potential. An investment of $ 700 million has been proposed in further development and expansion of the fields over the next few years.
“The fields and their expansion prospects underpin our commitment to India and form an important element of our strategy in the country,” Shaw said. The fields currently produce 1.487 million tonnes of crude oil and 2.917 billion cubic metres of gas and further investments were needed to maintain oil production and expand output from the Tapti gas field.
Sources said BG group chairman Richard Giordano will chair the first ever board meeting of the firm in India early next week. BG group chief executive Frank Chapman and chief finance officer Ashley Almanza are among those visiting India where they are slated to meet top govt officials and industry brass. ONGC is the largest shareholder in the field with 40 per cent stake while RIL has the remaining 30 per cent.
Meanwhile, ONGC in a press statement said the agreement for joint operatorship of Panna-Mukta and Tapti oil and gas fields was signed by ONGC director (offshore) V. K. Sharma, Reliance vice-president Y. P. Ajmani and BG India CEO Nigel Shaw in Mumbai yesterday evening.