By an OGJ correspondent
MUMBAI, Jan. 16 -- The 10-month standoff between British Gas PLC (BG) and India's state-owned Oil & Natural Gas Corp. (ONGC) over operatorship of the Panna-Mukta and Tapti oil and gas fields, although still unresolved, appears headed for a compromise.
The British firm has agreed to involve its two Indian partners in financial discussions. Mumbai-based Reliance Industries Ltd. is the third partner in the fields.
"They are coming closer to a solution," said India's Petroleum Secretary B K Chaturvedi. "BG group executives had conveyed last month that a solution was in sight, and ONGC too has conveyed to us that the differences have narrowed down."
In December, BG proposed involving ONGC and Reliance in the award of multi-million dollar contracts—a step that ONGC Chairman and Managing Director Subir Raha called "a welcome change."
"BG's approach till now has been to become de facto sole operator of the fields, which obviously was not acceptable to us," said Raha. "There is a shift in their stand, which is encouraging."
ONGC, which earlier stated that it would not settle for anything less than a joint operatorship, is looking at the latest offer to resolve the issue.
BG, which assumed interim operatorship of the fields after buying failed Enron Corp.'s 30% equity stake, also promised transparency and a greater participation by Indian partners in the decision-making process.
ONGC, which owns 40% of the equity, and Reliance, with 30%, were expected to invoke a termination notice to remove BG from interim operatorship at a Joint Operating Committee meeting in New Delhi on Dec. 4 (OGJ Online, Nov. 27, 2002). However, the issue was shelved "pending study of the fine print of the proposal."
An $800 million development plan to enhance the field is pending clearance. Meanwhile, the joint venture is losing an estimated $310,000/day from unrealized production potential.
