Norsk Hydro meets ONGC for talks on KG-DWN-98/2

Vol 11, PW 3 (14 Jun 07) Exploration & Production

Norwegian explorer Norsk Hydro is the latest company after Shell and Petrobras to show an interest in helping ONGC develop its gas discoveries in KG deepwater block KG-DWN-98/2.

Hydro senior vice president Petter Nore was in Delhi on 6th and 7th June with a team of specialists for talks with ONGC’s director offshore NK Mitra about KG-DWN-98/2 and the Vasai East oil and gasfield offshore Mumbai. Three days earlier ONGC announced that it had agreed to farm-out 15% of KG-DWN-98/2 to Brazil’s Petrobras in a series of swap agreements.

This would reduce ONGC’s stake to 65%. Cairn India holds the balance 10%.

Contacted by PETROWATCH, Nore tells this report: “We do not want to comment on our deal with ONGC until we get a formal contract in our hand.â€‌ However, this report learns from other sources that Hydro’s role at KG-DWN-98/2, when agreed with ONGC, would be restricted to that of a service provider, not equity holder.

This isn’t the first time that Hydro is visiting India for talks about KG-DWN-98/2. Last month on 15th and 16th May a team of Hydro specialists visited Chennai to evaluate block data, following which Hydro formally offered its expertise in developing the field to ONGC.

“Hydro wants to help develop a central â€کhub’ to exploit the different structures in the KG basin around the block,â€‌ says a source. “Gas production from individual structures is not economically viable.

Deepwater gas development is expensive. Linking all the structures to one production facility or a â€کhub’ will save costs.

â€‌ ONGC and Hydro are also planning to work together at the offshore Vasai East field. “Hydro has offered to provide assistance for â€کthin oil rim’ exploitation from Vasai East,â€‌ adds a source.

“Oil is there in some narrow structures at the field and ONGC does not have the technology to perforate these structures. Hydro can help with that.