Shirish Nadkarni
OGJ Correspondent
MUMBAI, Jan. 26 -- The proposed alliance between BG Group and Indian state firm Oil & Natural Gas Corp. (ONGC) for jointly exploring three deepwater blocks in the Krishna-Godavari (K-G) basin has been rejected by India's Ministry of Petroleum and Natural Gas.
The Ministry's decision to withdraw the blocks—KG-OS-DW, KG-OS-DW-III, and KG-OS-DW-EXTN—and offer them in a forthcoming round of bidding under the New Exploration Licensing Policy (NELP) has come at a time when the UK has been lobbying hard with India on behalf of British firms.
British Prime Minister Tony Blair had specifically written to his Indian counterpart Manmohan Singh urging him to consider the proposal favorably.
The blocks were allocated to ONGC on nomination basis before the advent of NELP, and their exploration licenses end in May. ONGC, flush with a recent massive gas strike in the K-G basin, wanted to develop them with BG in exchange for 50% equity.
In a recent letter to the Prime Minister's Office, Petroleum Minister Murli Deora wrote, "Subsequent to the receipt of a request from ONGC and the BG Group for reconsideration of our decision to put these blocks up for open bidding, the issue has been considered in detail and we have decided to reiterate our earlier decision."
In August 2006, ONGC had proposed to the Ministry to sell 50% of its participating interest in the three K-G basin blocks to BG, along with operatorship of the blocks, and issued a letter of acceptance to BG on Nov. 29, 2006.
However, the Petroleum Ministry was unhappy that ONGC had been able to get only a single bid from BG for partnering it in the three blocks, despite the K-G basin's emerging as one with tremendous potential.
The Ministry and the Directorate-General of Hydrocarbons were displeased with ONGC's performance at home in blocks given to it on nomination basis, and the fact that it had failed to develop them despite time extensions.
