India’s Oil and Natural Gas Corp is in talks with foreign oil majors BG, Eni and Shell to sell stakes in deepwater developments off the country’s resource-rich eastern coast, as it seeks to replicate the lucrative $7.2bn deal struck between BP and Reliance Industries.
AK Hazarika, the chairman of India’s biggest oil and gas group, told the Financial Times that the state-owned group was looking for a partner with the technological expertise to exploit its vast but untapped deepwater oil and gas reserves.
“For deepwater exploration we are definitely looking for some partner at least for the development part … we definitely want a company that can support us on the technical front,” said Mr Hazarika. “We are talking to many companies – in particular BG, Eni, Shell,” he added.
ONGC, which has a market capitalisation of $55bn, has already been collaborating with the British, Italian and Anglo-Dutch explorers but it is looking to deepen ties with foreign groups to boost the development of its 85 deepwater blocks in the Indian Ocean, according to Mr Hazarika.
Shell and BG declined to comment. Eni did not respond to an e-mail requesting comment.
For the first time the head of ONGC said the group planned to focus more on developing its ailing domestic assets than seek opportunities abroad.
In the last fiscal year ending in March, ONGC’s domestic oil output rose by 3 per cent to 27.28m tonnes and natural gas production fell 1.1 per cent to 25.32bn cubic metres. Overseas production of oil and gas equivalent during the same period reached 9.45m tonnes.
However, Mr Hazarika said that by 2017 the state-owned group wanted to double its domestic production of oil and gas equivalent to about 100m tonnes. He said that he also hoped to double overseas production but warned that it would take more time, as he admitted that it had not been easy for the Indian explorer to transform investment made in foreign energy assets into successful ventures.
Earlier this year, ONGC came under fire from India’s official auditor, which questioned the group’s ability to exploit overseas assets. ONGC has made sizeable investments in 35 countries including Russia and states in Africa, Latin America and the Middle East. However, it only managed to produce oil and gas from 10 sites.
Mr Hazarika said the company was negotiating with BG, Eni and Shell to develop resources in a number of blocks other than the ones where they were already co-operating, and that the talks had been under way for some time. But he did not offer a deadline for a final deal.
He stressed that the company was willing to give away up to 30 per cent of its assets in exchange for technical expertise.
Mr Hazarika said that the recent agreement between India’s Reliance and the UK’s BP, which purchased a 30 per cent stake in 23 offshore deepwater oil and gas assets controlled by Reliance for $7.2bn, was a benchmark for other Indian oil explorers.
“The [BP-Reliance] agreement was good for our country … you know, deepwater blocks without having a partner is very hard, this is a very different ball game [from onshore] … for deepwater we need a partner with experience,” said Mr Hazarika.
The 58-year-old executive said that although ONGC was focused on boosting domestic production in the short term, it was committed to investing in new forms of energy.
ONGC recently launched a new energy centre in New Delhi and has embarked on a massive diversification effort into uranium, solar, wind and coal as it seeks to counterbalance risks over depleting oil resources in the medium to long-term.
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