said. The matter is also before the Supreme Court.
The biggest casualty of ConocoPhillip’s decision could be on ONGC’s gas-rich KG basin block which is said to hold about 4.85 trillion cubic feet (tcf) of gas reserves (22 mmscmd of gas at peak production) and has shown good prospectivity for oil as well. This will be the company’s first significant producing block in the technologically-challenging deepwater zone when it comes on stream in 2017-18.
“Shell has been in discussions with us on deepwater. We were told that in case they were not interested in buying a stake, they could just provide us technology backup and consultancy for 98/2 (KG-DWN-98/2 block). We are still hopeful that they will join,” the ONGC official said.
ONGC has discovered gas in eight exploratory wells in the KG-DWN-98/2 block, the appraisals of which are expected to be completed in the next 2-3 months. One of the wells was drilled as deep as 2,541 metres. It was awarded to Cairn in the NELP round in 2000, which offloaded 90% stake to ONGC in 2005 before selling out completely.
ONGC’s KG block has received interest from international players in the past as well but delays in approving their participation stymied their entry. Though the farm-out agreements for giving 15% to Brazil’s Petrobras and 10% to Norway’s Statoil were signed in 2007, a joint operating agreement could not be signed.
An official from the upstream regulator Directorate General of Hydrocarbons (DGH), said that ONGC has been exploring in deepwater blocks right from the nomination era, before the NELP rounds, but did not find it viable owing to huge costs and lack of technical expertise.
Bob Fryklund, chief upstream strategist at IHS, however, said that more than technical expertise, which can be acquired with the help of consultants, it’s the difficult regulatory environment and unattractive pricing policy in India that has resulted in a weak deep water play for Indian companies.
A report commissioned by BP to global information company IHS on 12 basins in India notes that only onshore gas is economical within the price proposed by the Rangarajan Committee. The report states that water