Joint operatorship determined for Panna-Mukta fields

BG PLC, Reliance Industries Ltd., and Oil & Natural Gas Corp. (ONGC) have agreed to jointly operate Panna-Mukta and Tapti oil and gas fields in India. The agreement resolves a dispute over which company would operate the fields following more than a month of negotiations, often acrimonious, among the three.

April 9, 2002

2 min read

b>By an OGJ Online Correspondent

MUMBAI, Apr. 9 -- BG PLC, Reliance Industries Ltd., and Oil & Natural Gas Corp. (ONGC) have agreed to jointly operate Panna-Mukta and Tapti oil and gas fields in India. The agreement resolves a dispute over which company would operate the fields following more than a month of negotiations, often acrimonious, among the three.

Following a consensus reached at the meeting of the joint operating committee in Mumbai late last month, the three partners set up a panel to work out details for joint operatorship within 4 weeks.

The two Indian partners had rejected BG's proposal to operate the fields solo in exchange for buying out the stake of bankrupt US oil major Enron Corp. in the joint venture (OGJ Online Feb. 19, 2002).

ONGC Chairman Subir Raha, who had insisted on ONGC being sole operator of the fields, and BG India Chief Executive Nigel Shaw, who had been equally adamant about his company's rights to be sole operator, agreed that it was the only viable solution.

BG initially had made an offer of $388 million for Enron's 30% equity stake in the fields but subsequently revised the offer to $350 million after its condition that it assume operatorship snowballed into the major controversy.

ONGC, which owns 40% of the fields, with Reliance having the other 30% stake, had served a termination notice on BG, which took over operation of the fields from Enron in February, after the failure of talks between the partners.