Ongc Shortlists 12 Foreign Majors For Deep Sea Ventures

The Oil and Natural Gas Corporation (ONGC) has short-listed 12 foreign oil majors for a possible alliance for deep sea exploration under the New Exploration Licensing Policy (NELP).

The short-listed giants are Shell, Petrobras, Amereda Hess, Hudy Oil, Cairn, Enron, Chevron, Arco, Amoco, Total, Occidental and Japan National Oil Company.

The 12 companies will be invited for technical and commercial discussions with senior ONGC officials before their names are recommended to the cabinet for approval.

The corporation has decided to float different joint ventures with the international companies on a 50:50 equity basis. These ONGC chairman B C Bora has said on record that the idea is to acquire technology and then get into deep sea exploration in a big way.

ONGC has been allocated three deep sea blocks on a nomination basis, namely Cauvery offshore, Krishna-Godavari offshore and the Kerala-Konkan basin. The corporation will explore these three blocks on its own.

The tie-up with the foreign companies will be for all other deep-sea blocks that ONGC might be awarded through international competitive bidding. Each venture will explore a separate field.

ONGC will get only the administered price for the oil produced from the fields given to it on a nomination basis. However, under the NELP which applies to exploration in deep waters as well ONGC will get international prices for the oil produced from the fields awarded to it through international bidding.

Initially, ONGC will meet a large part of its funds requirement through internal resource generation. The corporation will go in for an equity expansion once development work on the deep water projects takes off. Of the total requirement of Rs 24,500 crore, about Rs 20,000 crore will be generated internally by the corporation.

The corporation sees a new opportunity to generate high revenue under the NELP, which will provide a it level playing field by offering the same fiscal and contractual terms that are available to private companies.

Besides international prices for the oil discovered by it, the corporation will also get several other fiscal incentives. Royalty payments will amount to 12.5 per cent for on-land areas and 10 per cent for offshore areas. Further, royalty will be charged at half the rate for deep water areas beyond 400 metres bathymetry for the first seven years after commencement of commercial production.

Cess payments have also been completely abolished for blocks offered under the new policy.

The NELP has also exempted ONGC and Oil India Limited (OIL) from payment of Customs duty on import of goods required for petroleum exploration and exploitation. This will bring the two public sector companies on par with private companies which enjoy this facility at present.