Block truths

New Delhi, Nov. 5: Japanese oil major Inpex has acquired a 26 per cent stake in a deep-water block of ONGC in the Krishna-Godavari basin.

The deal will help ONGC to get access to deep-water exploration technology and reduce its risk and investments.

No financial details of the transaction were provided. The deal, cleared by the boards of both the firms, is subject to approval by the government.

“ONGC and Inpex have entered into a strategic partnership for exploration of hydrocarbons in one of the acreages in the KG basin,” the state-owned firm said.

ONGC said this was yet another successful effort in its attempt to collaborate and expand its strategic interests. The sale comes close on the heels of the PSU’s recent tie-ups with global majors such as US-based ConocoPhillips, China’s CNPC and Colombia’s Ecopetrol SA.

An analyst, who did not wish to be identified, said the deal would benefit both the firms.

It provides the Japanese firm the opportunity to foray into Indian exploration, especially in a region estimated to have huge oil and gas reserves.

Inpex is present in 27 countries and has participatory interest in 56 projects, including a deep-water block in the Gulf of Mexico.

Inpax will compensate ONGC for its investments in the block and meet future expenses in proportion to its stake, the analyst said.

The block — KG-DWN-2004/6 — was awarded to an ONGC-led consortium under the sixth round of the New Exploration Licensing Policy in 2007, and is located around 300km off the Andhra Pradesh coast. It covers an area of 10,907 sq km and is located at a water depth of approximately 3,000 meters.

“Two-dimensional and three-dimensional seismic data have already been processed and exploratory well drilling is planned to be taken up this month itself and the potential of the block will be known soon,” a senior ONGC official said.

ONGC will continue to be the operator of the block with a 34 per cent stake.