David Young
OGJ Online
LONDON, Oct. 3 -- BG Group PLC has bought all of the assets of Enron Oil & Gas India Ltd. (EOGIL) for $388 million in cash from Enron Corp.
The assets include 30% of Tapti gas field and Panna-Mukta oil and gas field, and a 62.64% interest in the CB-OS/1 exploration license, all off the west coast of India.
Enron had been trying to sell the assets for some time. Completion of the sale is expected in a few weeks. It is subject to a number of consents and conditions including confirmation from joint venture partners of EOGIL's continuation as operator of the fields.
Equity production from the fields for the year ending Mar. 31 was 70 MMcf and 8,200 b/d. As of that date, EOGIL had net proved and probable reserves of over 170 MMboe.
BG Group is acquiring the reserves at a cost of less than $2.30/boe. EOGIL has net assets of $419 million and in the year ending Mar. 31, after-tax profit was $60 million on revenue of $160 million.
Further development of both Panna-Mukta and Tapti fields is expected over the next few years, subject to government and partner approval.
Partners in Panna-Mukta and Tapti offshore operations are Oil and Natural Gas Corp. Ltd. with 40% and Reliance Industries Ltd. with 30%. Partners in the CB-OS/1 license are Hindustan Oil Exploration Co., 17.36%, Tata Petrodyne 10%, and ONGC 10%.
EOGIL has 200 employees based offshore at the fields; offices in Mumbai, New Delhi, and Baroda; and a supply base at Bhavnagar, which supports exploration, development, and production activities for the fields. Gas Authority of India buys all gas output from the fields. Indian Oil Corp. buys oil production from the Panna-Mukta complex.
The deal does not include the Dabhol power station in which Enron has a 65% stake. Other shareholders in Dabhol are General Electric and Bechtel, each with 10%, and the Maharashtra State Electricity Board (MHSEB) with 15%. However, MHSEB is facing bankruptcy, which has forced the closure of the 740 Mw Dabhol station on the West Coast and shelved plans to expand it to 2,184 Mw.
There are rumors that Tata Power, India's largest private electricity company, is preparing to offer Enron $1 billion for its stake, a figure which Enron has said would be sufficient to only cover its costs and direct financial investment in the project.
Jeff Sherrick, president and CEO of Enron Global Exploration and Production, said the EOGIL sale would enable Enron to divest assets outside its wholesale and retail energy businesses."
Frank Chapman, BG CEO, said, "We see the building of gas markets in Gujarat and Maharashtra states as an important stepping-stone in realizing our long-term goal of importing liquefied natural gas through our Pipavav project."
BG has been active in India for more than 10 years and is a part owner of two gas distribution companies, Gujarat Gas Co. Ltd. (a 65% share) and Mahanagar Gas Ltd. (50%).
A month ago Gujarat Gas agreed to buy 1.27 million cu m/day of gas from Lakshmi field in the Gulf of Cambay off western India. That 5-year deal will begin by July 1.
In August, BG purchased the interests of Sea King Infrastructure Ltd. in the proposed Pipavav liquefied natural gas importation and re-gasification project in the state of Gujarat. BG is now the sole owner of the project.
