How to proceed if BG still interested

Vol 5, PW 22 (19 Dec 01) People & Policy

If British Gas renews its interest in Panna, Mukta and Tapti it could do worse than listen to the advice of a senior oilman with links to ONGC who talks to PETROWATCH on condition of anonymity.

"British Gas should concretely offer a larger role for the partners in the day-to-day operations of the consortium," he said. "They could begin with seconding personnel from ONGC and Reliance on the project team.

There could be actual joint management of the venture with a British Gas person as boss. This will be a welcome change from the way Enron conducted the venture." This is not all.

"British Gas could offer to put in all the money needed for the project for a period of, say, two years. ONGC and Reliance could be asked to repay this money, without interest, in instalments after the two-year period like an interest free loan to ONGC and Reliance.

This combined offer could be very attractive." Our expert also has a word of caution for ONGC and Reliance. "An operator needs a lot of flexibility," he adds.

"Businesses are not run on sentiments, but on facts and figures. ONGC made a serious mistake rejecting the 10% stake British Gas was offering in its three deepwater Brazil blocks.

They ought to have run a study on these blocks, generated a production profile and married it with the local fiscal regime to get the net present value. These blocks were good.

The BG person in India had to fight hard with his Brazil counterpart to get ONGC in but the moment ONGC refused, BG was only too glad to withdraw the offer."