Reliance sets its eyes on ONGC Videsh

Vol 14, PW 1 (01 Jul 10) People & Policy

Conspiracy theorists believe one of the main reasons Reliance is fielding its star geologist Ravi Bastia for the ONGC chairman and managing director post is because it has its eyes on ONGC Videsh, the overseas arm of parent company ONGC.

“If Bastia becomes ONGC chairman,” says an observer, “he can give Reliance an entry into some of OVL’s overseas blocks. In a few years OVL will be producing more oil and gas than ONGC.

” Reliance so far has stakes in only 13 overseas oil and gas blocks. By contrast OVL has an impressive portfolio of 39 oil and gas blocks across 16 countries.

It wouldn’t be the first time both companies have discussed jointly acquiring assets abroad. Reliance hoped to partner OVL in Venezuela for the Carabobo-1 project, but talks broke down.

“All decisions taken by the OVL board must be endorsed by the ONGC chairman,” adds another source. “So having Bastia as chairman could prove useful to Reliance when future overseas blocks are considered.

” Reliance isn’t interested in influencing ONGC, say other sources, because it already produces more gas than ONGC has ever produced. Others go further, and say if Bastia becomes ONGC chairman, Reliance could even ask him to delay development of ONGC’s discoveries, especially on the east coast.

“Gas consumers would then continue to depend on D6 gas,” we hear. Should Bastia fail to become the next ONGC chairman, Reliance is also believed to be backing a proposal to separate the roles of chairman and managing director with the creation of a new CEO position.

“Reliance is supporting the proposal so it can put Bastia in the CEO position if he doesn’t become ONGC chairman,” says a frequent oil ministry visitor. “Mukesh Ambani has met (oil minister) Murli Deora about this and both are in agreement.