Market price for a barrel of deepwater crude

Vol 4, PW 12 (19 Jul 00) Exploration & Production

It's official.

If you strike oil in an alliance with ONGC you will now be paid the full market rate for a barrel of crude. ONGC has received government permission - in writing.

In a letter dated 9th June, addressed to Chairman Bikash Bora, ministry official Sunita Sharma confirms that foreign oil companies and ONGC can benefit from the market price for crude discovered in 6 deepwater blocks awarded to ONGC on a nomination basis. The letter is a belated victory for ONGC but victory it clearly is.

It gives the Indian oil major permission to proceed with selection of a joint venture partner. A bigger question is this: after two years of waiting, is anyone still interestedFed up with the Indian oil ministrys indecision on the matter, many oil majors have by now given up and walked away.

For two years ONGC has fought a hard battle with the Indian oil ministry to ensure that any future foreign partner would receive market prices for crude discovered in Indian deep waters, not a price fixed by the government. Bora first wrote a letter to the oil ministry requesting "NELP Terms" (available only for acreage awarded under the New Exploration Licensing Policy) on 17th October 1998.

Months of deafening silence ensued, as officials argued on the merits of awarding favourable terms to acreage awarded on a "nomination" basis, not via open tender. Persistent and effective lobbying by ONGC eventually swayed the Indian cabinet, which on 23rd April this year agreed to the request.

That decision has now seeped through the Indian oil ministry back to ONGC.