ONGC to pick 50% in US firm’s Nepal blocks

Anupama Airy

New Delhi, Oct 24: Oil and Natural Gas Corporation (ONGC) is close to acquiring 50 per cent stake of the US-based oil major — Texana Resources — in two exploration blocks in Nepal.

Senior government officials told The Financial Express that investment in these two blocks by ONGC was of strategic importance for India as they were located on the Indo-Nepal border. Moreover, these blocks were located close to two other blocks awarded to the ONGC-IndianOil combine in the Ganga basin on the Indian side.

Officials also said leading petroleum companies in China and Pakistan had also shown interest for participating in these blocks along with Texana. “Two Chinese companies, China National Star Petroleum Company and National Oil and Gas Company, besides Pakistan’s Oil and Gas Development Corporation had also expressed their interest to collaborate with Texana Resources for oil exploration in these areas,” sources said, adding ONGC and Texana also planned to join hands for submitting bids for subsequent offer of exploration blocks by Nepal.

Officials said Texana had also agreed to transfer operatorship rights for these two blocks to ONGC. “The joint operating agreement for these two blocks will be signed shortly by ONGC Videsh and Texana,” they added.

“The blocks 3 and 5 of in the Terai region of Nepal (awarded to Texana) are close to the two blocks of the IOC-ONGC combine in the Ganga basin and, therefore, once the operatorship is effected, it is in the interest of ONGC that it handles the operatorship of all these blocks and achieve synergy and cost savings,” officials explained.

Significantly, sources also said after the discovery of oil and gas, ONGC would also have the right to export oil and build a pipeline if required. The same would be incorporated in the joint agreement between the two companies, sources added. Moreover, it has also been agreed by the two companies that ONGC would not share the past costs incurred by Texana in these blocks. However, ONGC would share all future costs in proportion to its participating interest share from the effective date of signing the joint operating agreement.

Officials also said on a reciprocal basis, Texana had asked ONGC to provide it a 25 per cent stake in another block held by the IOC-ONGC combine. However, no decision had been taken on this issue as yet.
The two blocks, block 3 in the Nepalganj area and block 5 in the Chitwan region, were awarded to Texana by Nepal in 1998 under a production sharing contract. Oil and gas reserves in block 3 have been estimated at 14.41 million metric tonne (mmt) and 9.4 billion cubic meter (bcm) while in block 5 oil and gas reserves have been pegged at 11.70 mmt and 8.8 bcm, respectively.