Interestingly, the new agreement unlike the earlier one, which expired in December, is not subject to BG getting the operatorship right from Enron Oil and Gas India (EOGIL).
However, BG India chief executive Nigel Shaw in a press statement said that since EOGIL was the operator of these fields, as purchaser they were expected to carry on as operator.
“We will continue our discussions with Oil and Natural Corporation and Reliance Industries, the partners in the assets to reach a mutually satisfactory outcome on operatorship,” he said.
The transaction is expected to be completed by mid-February.
According to a BG India release, the renegotiated agreement takes into account Enron’s position after it filed for chapter 11 bankruptcy protection in the United States. The original sale and purchase agreement was operatorshipNegotiations among the three stake holders are continuing. At one point, BG even made a cash offer to ONGC. It also offered 10 per cent interest in a Brazilian exploration block to ONGC but withdrew soon after announced on October 3, 2001 but it terminated in December 2001 following slower than anticipated progress to close the transaction, said the release.
The revised agreement has been reviewed by Enron’s creditors’ committee and is subject to a number of conditions, including the approval of the bankruptcy court. Enron will be filing a motion with the court shortly seeking such approval.
Both ONGC and RIL, which have 40 and 30 per cent stake, respectively, had staked claim for operatorship after the present operator, EOGIL, decided to exit in favour of BG.
The Panna-Mukta fields have recoverable reserves of 184 million barrels of oil and oil equivalent gas and the Tapti field has reserves of 96.3 million cubic metre gas.
A Reuter report from London quoted BG chief executive Frank Chapman as saying that the assets were important to the group’s long-term strategy for India and would enable them to build a material gas position in the country.