New Delhi, Dec. 21: ONGC Ltd plans to buy Cairn India’s 10 per cent stake in a gas block in the KG basin, adjacent to Reliance Industries’ D6 block.
“The board has given its approval to buy Cairn India’s 10 per cent stake in Block KG-DWN-98/2,” ONGC chairman and managing director Sudhir Vasudeva said, adding that the firm will pay the cost incurred by Cairn India so far.
ONGC, which is the operator of the block and also owns the remaining 90 per cent, will pay about $47 million for the stake.
Cairn India had made four discoveries in the block and wanted to sell its entire stake to ONGC in 2005. However, ONGC bought only 90 per cent as it wanted to utilise Cairn India’s expertise and knowledge. A few months back, Cairn had written to ONGC saying, “the hitherto discovered oil and gas resources in the block are only marginal to non-commercial, because of their small size and the potential high development costs due to water depth versus the prevailing gas prices”.
ONGC was in talks with Italian oil major Eni and BG Group for selling up to 30 per cent in the gas-rich block.
ONGC had estimated the deepwater block to produce a total of at least 87 billion cubic metres of gas.
The PSU proposes to invest over $7.3 billion to produce up to 30 million standard cubic metres per day of gas.
The block is divided into northern and southern discovery areas.
As the discoveries are small to marginal and cannot be developed on a standalone basis because of high costs, ONGC proposes to develop the discoveries in an integrated cluster and plans to approach the director general of hydrocarbons for approval, officials said.
Capex plan
Vasudeva said the firm had planned an 11 per cent increase in capital expenditure (capex) to Rs 31,000 crore in 2012-13 for its exploration and production activities and other ongoing projects. A bulk of the expenditure will be funded through internal accruals. The firm has a capex plan of Rs 28,000 crore in the current fiscal.
Independent directors
ONGC today said the government had appointed three independent directors, which included a former bureaucrat, on its board with effect from December 14.
“The ministry of petroleum and natural gas, vide letter dated December 14, 2011, has appointed S.K. Barua, director, IIM Ahmedabad; .P. Bhatt, former chairman of the State Bank of India and Sushma Nath, former secretary to the Government of India as non-official part-time directors on the board,” ONGC informed the BSE.
ONGC now meets Sebi’s listing requirement of having equal number of executive and independent directors, paving the way for its follow-on public offer.
