BG rejects ONGC offer on operatorship of three Indian fields

A unit of BG Group PLC has rejected Indian state-owned Oil & Natural Gas Corp.'s offer to allow BG to take over operatorship of the Panna, Mukta, and Tapti oil and gas fields in return for equity interests in proven oil fields.

Nov. 6, 2001

2 min read

By an OGJ Online Correspondent

MUMBAI, Nov. 6 -- A unit of BG Group PLC has rejected Indian state-owned Oil & Natural Gas Corp.'s offer to allow BG to assume operatorship of Panna, Mukta, and Tapti oil and gas fields in return for equity interests in proven oil fields.

"We have turned down ONGC's demand, and are continuing negotiations on getting the operatorship of the three fields," said C.R. Prasad, non-executive chairman of British Gas India. "Nothing has been firmed up as yet, but we are confident of resolving the issue soon."

BG India had set Oct. 31 as the deadline for resolving the issue of operatorship, to which it had staked a claim after taking over the current operator Enron's 30% equity stake in the three fields for an aggregate amount of $388 million (OGJ Online, Oct. 3, 2001). However, the other partners, Reliance Industries Ltd. unit Reliance Petroleum (30%) and ONGC (40%), also sought the operatorship.

To become operator and to ensure smooth asset transition, BG had offered ONGC some exploration acreage in Brazil as well as settlement of the cash-call dispute between the three partners and assistance in deep-water exploration. However, the Indian company instead wants equity in proven fields.

"Even before the Panna, Mukta and Tapti fields were handed over to Enron, it was ONGC that had developed these fields," said ONGC chairman and managing director Subir Raha. "We are willing to forego our claim to operatorship in favor of BG, but only if we get the kind of proven exploration acreage that we are looking for."

The government can only intervene in the dispute if the partners ask for assistance.