ONGC offers NELP terms for 5 deepwater blocks

Vol 8, PW 22 (09 Feb 05) Exploration & Production

ONGCs decision to offer up to 50% equity in five of its pre-NELP deepwater blocks has gone largely unnoticed amid the hype generated by NELP-V.

ONGC is looking for partners to farm-out equity in three Krishna Godavari blocks and one each in the Kerala Konkan and Kutch basins. All five are being auctioned alongside 20 exploration blocks under NELP-V.

Important to note is that this is not the first time ONGC is looking for overseas partners for these blocks. Crucially though, it is the first time ONGC is offering attractive NELP terms to prospective partners, including the right to sell discovered oil or gas in the domestic market at commercial rates, an income tax holiday for the first seven years of production, no customs duty on imports for petroleum operations and cost recovery up to 100%.

Companies along with ONGC shall execute a Production Sharing Contract (PSC) with the Government of India, which will be based on a Model Production Sharing Contract (MPSC) under the New Exploration Licensing Policy, reads the ONGC notice. Adds a senior ONGC source: In the past we were never allowed (by the government) to offer NELP terms.

ONGC first began looking for partners for these five blocks in the late 90s. Total, Mobil, Shell, Elf, Petrobras and Statoil were all interested at the time but backed out when ONGC was unable to offer NELP terms and delayed drafting a model farm-out agreement.

We had prolonged discussions with Total as it was drilling in the neighbouring block in Pakistan in the Kutch offshore region, he adds. But there was no support from the government so we could not go further.

ONGC admits that its search for partners is driven by lack of deepwater experience. We cant deny that ONGC lacks expertise in deepwater exploration, he adds.

We want to partner companies who have knowledge and experience of deepwater exploration in the Gulf of Mexico or the North Sea. Notice inviting Expression of Interest for strategic alliance in deepwater PEL areas of ONGC