ExxonMobil and ONGC to extend partnership to Andaman offshore

India is doubling up efforts to bring in private participation across the value chain of the oil and gas sector. According to a top oil ministry official, global oil and gas major ExxonMobil is in talks with public sector undertaking (PSU) Oil and Natural Gas Corporation (ONGC) for a large domestic oil and gas exploration project.

In another significant development, the Ministry of Petroleum and Natural Gas is said to be facilitating talks between private sector oil refining companies and PSUs to bring down the costs of crude oil purchases.

These talks were taken forward during meetings between ExxonMobil’s executives and oil ministry officials on Friday. “The focus of the agreement is on offshore exploration. ONGC’s Andaman offshore asset is part of the discussions between the two companies,” the official told Business Standard.

“ExxonMobil’s initial participation will be related to exploration and seismic activities. But it may extend to a stake buy,” he added.

Elaborating on the meeting between public and private sector oil refiners for joint crude oil purchases, Petroleum Minister Hardeep Puri said, “Private companies are enthused by the plan.”

If successful, these contracts will happen for the first time in India, where oil refineries usually approach oil producers individually. There is some synergy between PSUs, but the private sector has not been involved in it till now.

India has been looking at avenues to cut crude oil purchase costs. Private refiners such as Reliance and Nayara Energy command over a third of India’s total crude oil refining capacity.

“These joint contracts will bank upon the purchase power of the nation, allowing more leverage during negotiations,” a senior official said.

ONGC and ExxonMobil had signed a Memorandum of Understanding (MoU) on October 14, 2019, to allow the two petroleum companies to undertake joint technical studies and cooperate in frontier areas. This agreement included work on deep water and other Petroleum Exploration Licence (PEL) blocks of ONGC in east and west coast and open acreages for joint bidding.

“The partnership with ONGC has entered the second phase which entails transfer of data. Some approvals were required for it which have come now. We are examining all existing deep-water assets under this partnership,” another official aware of the developments said.

“We have encouraged them to do more exploration and production in India. We had taken some decisions on sharing our knowledge and data, we are taking other steps. I think the point which comes through in all these meetings, whether it is Exxon, or TotalEnergies or anyone else, is that they saw the positive vibes and political commitment on this,” Petroleum Minister, Hardeep Puri said at a press conference after the conclusion of India Energy Forum by CERAWeek.

“We will do whatever is required to boost domestic oil and gas production. Out of the 26 sedimentary basins, only eight are under exploration. When a government makes a statement to that effect, it indicates both clarity and statement of intent, that we propose in a very focused time-bound manner to subject the other sedimentary basins also to exploration,” Puri said in response to queries from this paper.