ONGC asks government to remove BG Group as operator of fields

India's state-owned Oil and Natural Gas Corp. (ONGC) recommended that the government remove BG Group PLC as operator of the controversial Panna, Mukta, and Tapti oil and gas fields, should current negotiations fail.

Nov 27th, 2002

By OGJ editors
MUMBAI, Nov. 27 -- India's state-owned Oil and Natural Gas Corp. (ONGC) recommended that the government remove BG Group PLC as operator of the controversial Panna, Mukta, and Tapti oil and gas fields, should current negotiations fail.

ONGC, BG, and Reliance Industries Ltd.—equity partners in the fields at a ratio of 40:30:30, respectively—still cannot agree on any model for operating the fields, said ONGC officials.

"We have examined all possible proposals; we have discussed enough, and there is nothing more left to say," said Subir Raha, ONGC's chairman and managing director. "The deadline of Sept. 30 that the government had set for settlement of the dispute has long passed. That is why we have written to the authorities, asking that the termination clause be invoked."

Operatorship has been a major bone of contention among the three partners ever since BG bought out troubled Enron Corp.'s 30% equity in that project for $350 million earlier this year. BG Exploration & Production was to operate the fields under an "interim operatorship" agreement.

However, Raha claimed any private operatorship agreement between Enron and BG is not binding upon the other two partners.

Although ONGC has the maximum equity stake in the fields, it cannot automatically claim operatorship, since that must be a matter for mutual agreement among the partners. "We suggested several management models from time to time, but each of these was rejected by one of the other two parties," said Raha. "BG rejected the joint management model we proposed." Under that model, BG would operate the fields, Reliance would manage the finance, and ONGC would manage the joint venture overall.

More in General Interest