Sharma: Looking for ally

New Delhi, April 15: ONGC is in talks with America’s ExxonMobil and other global players to take the place of Norway’s Statoil and Brazil’s Petrobras in its Krishna Godavari block on the east coast.

The state-owned firm expects gas production from the block to begin in 2015-16 and is keen on a higher price than $4.20 per million British thermal unit.

“We are talking to a lot of people,” ONGC chairman and managing director R.S. Sharma said, refusing to divulge details.

“We are looking at firms for technology (to produce gas from ultra deep sea) and risk sharing,” ONGC director (finance) Dinesh K. Sarraf said.

Statoil and Petrobras, specialists in deep-sea production technologies, decided to quit block KG-DWN-98/2 because of government delays in approving their participation in the deepwater acreage.

A senior ministry official said international firms had used red tape and uncertainty in policy matters “as a pretext to relinquish” participating interest. The fact, however, is that such decisions are made purely on economic considerations and these firms “have quit the KG basin blocks as they have found greener pastures elsewhere”.

Statoil and Petrobras signed farm-in agreements for 10 per cent and 15 per cent stakes in the KG block, respectively, in 2007, but a joint operating agreement could not be signed because of delays in various approvals. The block sits next to Reliance Industries’ prolific KG-D6 fields.

ONGC is looking for a 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 depth in the geologically hostile KG basin.

The block now has 10 discoveries and appraisal drilling will be carried out to assess the potential before finalising the development of gasfields.