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ONGC to buy out BG Group’s stake in three gas blocks
Less than two years after Norwegian oil major Statoil and Brazil’s Petrobras quit Oil and Natural Gas Corporation’s (ONGC) KG basin gas block over Government delays in clearing their participation in deepwater acreage, the state-owned firm’s board on Wednesday approved BG Group Plc’s proposal to exit from three joint venture exploration blocks, though it added that the British entity’s departure was purely a “business interest” decision.
The UK-based group will pay $50 million to ONGC as per its unfulfilled drilling commitments, ONGC Chairman Sudhir Vasudeva told reporters after the board meeting.
Putting up a brave face however he hastened to add that the exit should not be viewed in negative terms as “they (BG Group) are exiting purely owing to their business interests and there are other players which will come (in their place)”.
BG is exiting its 25 per cent participating interest in MN-DWN-2002/2 block in the Mahanadi basin. It is also exiting two blocks in the Krishna Godavari basin where it holds 30 per cent and 45 per cent interest.
While it is ONGC which is buying BG’s stake in the three blocks, no cash will be transferred from its side. Instead, it will get cash in lieu of past liabilities of the British group in the blocks, Vasudeva said.
The $50 million which BG Group would pay to ONGC is towards clearance of outstanding costs incurred by the state-owned entity on behalf of the UK-based company, ONGC Director (Exploration) S V Rao said.
BG and ONGC had won the 1,131 sq km KG-OSN-2004/1 block under the sixth round of the New Exploration Licencing Policy (NELP) in 2006. ONGC, which held a 55 per cent in the block, would have a 100 per cent stake after the transaction in the block.
Meanwhile the ONGC board in the meeting also approved a Rs 352.5 crore investment in producing oil from a marginal field off the Mumbai coast.
Vasudeva said the company board has also approved payment of an interim dividend of Rs 6.25 per equity share of Rs 5 each for 2011-12.
“The total payout on this account will be Rs 5,347.20 crore, out of which the Government of India will reap Rs 3,964.36 crore,” he told reporters.
Including dividend tax of Rs 867.45 crore, the total payout works out to Rs 6,214.65 crore.
As a result, the total payout to the Government of India, including dividend tax, will amount to Rs 4,831.81 crore.
The board also approved a Rs 115 crore investment in the Heera and South Heera fields, situated 70 km South-West of Mumbai city.
“The Feasibility Report of Heera Redevelopment Phase-II is presently under examination and due for put up to the board in March, 2012,” he said.
Considering the onset of the monsoon in mid-2012, the ONGC board decided to grant approval to the project ahead of ratification of the feasibility report as it would enable expeditious production of oil and gas through three clamp-on structures, of which two will be completed before the onset of the monsoon.
It has been felt that with this proactive and advanced action, drilling activities in the slots of the clamp-on could be conducted even during the monsoon, which would make early production from these wells during 2012-13 & 2013-14 possible, Vasudeva said.
Less than two years after Norwegian oil major Statoil and Brazil’s Petrobras quit Oil and Natural Gas Corporation’s (ONGC) KG basin gas block over Government delays in clearing their participation in deepwater acreage, the state-owned firm’s board on Wednesday approved BG Group Plc’s proposal to exit from three joint venture exploration blocks, though it added that the British entity’s departure was purely a “business interest” decision.
The UK-based group will pay $50 million to ONGC as per its unfulfilled drilling commitments, ONGC Chairman Sudhir Vasudeva told reporters after the board meeting.
Putting up a brave face however he hastened to add that the exit should not be viewed in negative terms as “they (BG Group) are exiting purely owing to their business interests and there are other players which will come (in their place)”.
BG is exiting its 25 per cent participating interest in MN-DWN-2002/2 block in the Mahanadi basin. It is also exiting two blocks in the Krishna Godavari basin where it holds 30 per cent and 45 per cent interest.
While it is ONGC which is buying BG’s stake in the three blocks, no cash will be transferred from its side. Instead, it will get cash in lieu of past liabilities of the British group in the blocks, Vasudeva said.
The $50 million which BG Group would pay to ONGC is towards clearance of outstanding costs incurred by the state-owned entity on behalf of the UK-based company, ONGC Director (Exploration) S V Rao said.
BG and ONGC had won the 1,131 sq km KG-OSN-2004/1 block under the sixth round of the New Exploration Licencing Policy (NELP) in 2006. ONGC, which held a 55 per cent in the block, would have a 100 per cent stake after the transaction in the block.
Meanwhile the ONGC board in the meeting also approved a Rs 352.5 crore investment in producing oil from a marginal field off the Mumbai coast.
Vasudeva said the company board has also approved payment of an interim dividend of Rs 6.25 per equity share of Rs 5 each for 2011-12.
“The total payout on this account will be Rs 5,347.20 crore, out of which the Government of India will reap Rs 3,964.36 crore,” he told reporters.
Including dividend tax of Rs 867.45 crore, the total payout works out to Rs 6,214.65 crore.
As a result, the total payout to the Government of India, including dividend tax, will amount to Rs 4,831.81 crore.
The board also approved a Rs 115 crore investment in the Heera and South Heera fields, situated 70 km South-West of Mumbai city.
“The Feasibility Report of Heera Redevelopment Phase-II is presently under examination and due for put up to the board in March, 2012,” he said.
Considering the onset of the monsoon in mid-2012, the ONGC board decided to grant approval to the project ahead of ratification of the feasibility report as it would enable expeditious production of oil and gas through three clamp-on structures, of which two will be completed before the onset of the monsoon.
It has been felt that with this proactive and advanced action, drilling activities in the slots of the clamp-on could be conducted even during the monsoon, which would make early production from these wells during 2012-13 & 2013-14 possible, Vasudeva said.
