BRITISH GAS: TALKS TO ONGC

Vol 2, PW 22 (11 Nov 98) Exploration & Production
     

British Gas is the latest company with ambitions to become an upstream player in India.

British Gas Exploration and Production (BGEP) has a sizable upstream operation in Pakistan but in India BGs activity is principally downstream, in gas distribution and (possibly) the import of LNG. That could soon change.

This report learns from sources at ONGC that a team from BGEP has held meetings with ONGC Chairman, Bikash Bora; Director Operations, AS Soni; and Director Exploration, TK Gopalaswamy. Talks focused on BGs interest in ONGCs unexploited gas prospects.

By all accounts, ONGC is keen to talk. It is not difficult to see why.

Traditionally, ONGC has focused on exploration and production of liquid, not gas. In India, gas production has never been a profitable business, as all production had to be sold to the monopoly buyer, Gas Authority of India (GAIL), at low prices.

Now, however, the government has begun to de-regulate gas prices. In some cases, even allowing producers to sell direct to end users.

Suddenly, ONGC realises it is sitting on some valuable unexploited assets. Enter BGEP: a niche gas company, with a niche strategy - a strategy which makes perfect business sense, given the vast quantities of unexploited gas in India.

In Gujarat, meanwhile, British Gas owns Gujarat Gas Company, the largest private sector gas pipeline company - and an eager customer! *British Gas has also visited the data viewing room at the office of the Directorate General of Hydrocarbons (DGH) in Delhi to examine seismic related to the 48 concessions due to be auctioned under the New Exploration Licensing Policy (NELP).