BG set to pay $50m to exit three NELP blocks

Vol 19, PW 14 (24 Mar 16) Exploration & Production
     

ONGC is wishing it received the money four years ago.

But the good news is that BG India, now a Shell-owned company, is ready to pay $50m to ONGC as full and final settlement in a deal to exit two KG basin and one Mahanadi basin exploration block. On March 15, the DGH wrote to ONGC and BG clearing the long-pending transfer of the 25% stake held by BG in exploration block MN-DWN-2002/2, after this was endorsed by the oil ministry in February.

BG now has to pay ONGC the full $50m for its unfulfilled drilling commitment within 15 days of the DGH letter. This will be a relief for ONGC which has been waiting anxiously since January 4, 2012 when it first announced it was ready to acquire BG's 25% stake in MN-DWN-2002/2, 30% in KG-DWN-98/4 and 45% in gas discovery block KG-OSN-2004/1.

"Under the deal," says an ONGC source, "BG was ready to pay us $50m but only after the ministry approved the stake transfer in all three blocks." Approval for the stake transfer in KG-OSN-2004/1 and KG-DWN-98/4 came fast, in 2013 itself. But the MN-DWN-2002/2 stake transfer was held up by an unsubstantiated investigation.

"They (the oil ministry) didn't bother to check the merit of the complaint," complains ONGC. "It blindly began an inquiry which held up our payment.

What about the interest we've lost?"