Shell talks to Oilmax for Panna-Mukta fields

Vol 20, PW 17 (18 May 17) People & Policy

Shell is in talks to sell its 30% stake in the Panna and Mukta oil and gasfields to Mumbai-based Oilmax.

A well-placed source tells us Shell began talks with Oilmax, promoted by former BG India chief Kapil Garg, several months ago and that talks are at an advanced stage. "Shell knows that Panna and Mukta are nearing the end of their commercial life and wants to get out," he says.

"This is not unusual. All majors sell off such fields to small players when they don't see upside." Shell inherited its 30% stake on February 15, 2016 when it bought BG and its global operations.

Jointly pumping out 16,000 b/d and 4.6m cm/d, Shell believes Panna and Mukta, which it operates jointly with ONGC (40%) and Reliance (30%), are not material when set against the scale at which it works globally. Any stake sale however would need oil ministry endorsement: the PSC ends on December 22, 2019 and neither (earlier owner) BG nor Shell has applied for an extension.

"Oilmax has made a proposal to Shell," we hear. "And has also taken it forward by starting discussions with the oil ministry.

If it wants to buy these fields from Shell it will have to get ministry approval to extend the PSC." By e-mail Shell said: "Shell does not respond to market speculation." Oilmax also firmly declined to comment.