Two key partners quit ONGC gas field over delays

Norwegian oil major Statoil and Brazil's Petrobras have quit Oil and Natural Gas Corp's (ONGC) KG basin gas block over government delays in approving their participation in the deepwater acreage.

Petroleo Brasileiro SA or Petrobras, Brazil's state-controlled oil firm, has offered ONGC its 15 per cent interest in the Krishna Godavari basin block that sits next to Reliance Industries prolific KG-D6 fields without any cost.

Similarly, Statoil has decided against participating in future drilling in the acreage off the Andhra coast.

Sources said this follows apparent unwillingness of the Petroleum Ministry and its technical wing DGH to accord approvals for equity participation by foreign companies and the inordinate delays in clearing the drilling programmes.

ONGC will now have to go it alone and shoulder added risks in developing the acreage KG-DWN-98/2 which is estimated to have an in-place gas reserves of 14 trillion cubic feet.

The state-owned firm does not have the production technology to produce gas from such water depth in the geologically hostile KG basin.

ONGC Chairman and Managing Director R S Sharma shot off an angry letter to the Oil Secretary saying red tape was making international oil majors apprehensive over sharing exploration risks in acreages where they pick up stake.

ONGC in 2007 had farmed out 15 per cent interest in the block to Petrobras and 10 per cent to Norsk Hydro (now Statoil Hydro).