ONGC to lose rights over 5 KG blocks

NEW DELHI: ONGC will soon have to relinquish its rights over at least five blocks in the gas-rich KG basin as the government has decided to take back these blocks in this region and put them up for bidding under the New Exploration Licensing Policy (NELP-VII).

And, the impact of this decision would not be limited to the national oil company alone. Global oil majors British Gas and Shell, which h ad forged alliances with ONGC only a few months back to hitch a ride on the KG basin, will be left high and dry with the decision.

This is part of a larger policy that the petroleum ministry is working upon by which national oil companies would no longer be given a special preference for securing oil blocks. Senior officials in the petroleum ministry said: “ONGC will have to relinquish its rights on these blocks as they have failed to show results in the past eight years. We have decided to discontinue with the nomination policy where national oil companies were awarded blocks on a platter.”

The petroleum ministry will soon be taking an inventory meeting in consultation with the Directorate General of Hydrocarbons (DGH) to take stock of all such blocks. Both OIL and ONGC may need to give up blocks or provide convincing justifications for no results.

In these blocks, Reliance had made the largest find in ’02 followed by other significant finds by Gujarat State Petroleum Corporation. Petroleum ministry officials are of the view that it is not proper to reserve blocks for national oil companies if they do not show results within the stipulated time. Operating rights for these blocks were time-bound and ONGC had already been warned by the DGH, sources said.

It remains to be seen as to how Shell and BG react to these decisions. Both the oil majors had reached an understanding with ONGC to farm in into these blocks. ONGC’s partnership with Shell was part of the larger deal where ONGC managed to get a stake in the Brazilian Campos basin in return for farming in Shell as a partner in the KG basin.