Choose between us or Reliance, ONGC tells GAIL

Vol 6, PW 15 (25 Sep 02) People & Policy

ONGC MUST SEE Reliance as its biggest rival in India! How else to explain an ONGC ultimatum to GAIL days before submission of NELP bids on 28th August GAIL tells us it was forced to drop Reliance as a potential partner after receiving a menacing threat from ONGC.

On 28th August, GAIL only submitted bids for two eastern offshore deepwater blocks in alliance with ONGC. But it wanted to bid for several other blocks with Reliance.

"Discussions had reached an advanced stage," reveals GAIL. "Reliance was very keen on partnering us and our board gave us the freedom to decide." But to GAIL's dismay, ONGC served the ultimatum.

"They told us to choose between them and Reliance." Why did GAIL give in Blame it on the typical PSU risk-avoidance mentality and on the absence of key GAIL personnel who could have withstood ONGC bullying when the decision was taken to drop Reliance. ONGC is unrepentant.

"We told them to make up their mind either way and not sit on the fence, that is all," reveals an insider. Remarkably, GAIL managed to upset another company too: Hindustan Oil Exploration Company.

HOEC waited in vain to partner GAIL in two Krishna Godavari shallow water blocks, the 210-sq km block KG-OSN-2001/2 and the 1,850-sq km block KG-OSN-2001/3. But for reasons unclear, GAIL pulled out at the last minute.

"HOEC was very upset with us," he adds. "The KG blocks they wanted are very good blocks." On 28th August HOEC bid for nothing; it kept no other option open!