BG pays $15m for three ONGC deepwater blocks
ONGC has formally accepted a bid by British Gas to help it develop three deepwater blocks in the Krishna Godavari basin.
On 29th November, BG received a Letter of Acceptance signed by ONGC materials management department deputy general manager Dinesh Satija. The single page letter asks BG to nominate an authorised official to sign the agreement.
Also, it says ONGCs acceptance of BGs offer is subject to government approval. KG-OS-DW, KG-OS-DW extension and KG-OS-DW-III are from a group of five for which ONGC has been looking for a partner since 1999.
BG was the sole bidder, but two other blocks (one each in the Kutch and Kerala-Konkan offshore) received no bids. Over the past two months BG and ONGC have been in talks on the terms of the proposed partnership.
Each company will hold 50% in the joint venture for the three blocks and joint operatorship. BG will pay $5m for each block as upfront payment.
On 1st December, BG Chief executive officer Frank Chapman and ONGC chairman Subir Raha were scheduled to announce the agreement in Jaipur at the World Oil and Gas Assembly but this was put back. BG will sign a farm-in agreement with ONGC and the joint operating model will be similar to that followed in the Panna, Mukta and Tapti fields offshore Mumbai where ONGC, BG and Reliance are partners.
ONGC, we hear, is very happy with the PMT model. Broadly, ONGC will oversee commercial and financial aspects while BG will look after day-to-day management and geological and geophysical issues.
This division is not watertight. ONGC will also be associated with the day-to-day management and geological and geophysical issues, we hear.
A joint working team is being set up and it will function from Delhi. Government approval is a must as the three blocks were given to ONGC under a special dispensation.
This approval is expected soon and the agreement could be signed by the end of December. Actual work will begin in January.
