Oil and Natural Gas Corporation (ONGC) will sign a memorandum of understanding (MoU) with Kuwait Petroleum Corporation on Tuesday as the PSU major attempts to sell stake in its subsidiary companies ONGC Petro Additions (OPAL) and ONGC Mangalore Petrochemicals (OMPL).

According to ONGC officials, a non-disclosure agreement (NDA) will be signed between the two sides under which Kuwait?s oil company will undertake a due diligence on both projects. ?We are looking to sell stakes in these projects to an international investor. This may eventually lead to a deal being struck at a later date,” said an official. An NDA is a legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to or by third parties.

The petchem company OPAL was incorporated in 2006, promoted by ONGC and co-promoted by GAIL and GSPC. ONGC plans to offer atleast 25% stake in the company to an international investor. It is setting up a complex in Dahej, Gujarat, which will have a 1.1 million tonnes dual feed cracker with an investment of R21,000 crore and is spread out in an area of 507 hectares. ONGC is looking to sell stake in the project through a strategic sale as well as an IPO. ONGC is the promoter of the project and owns a 26% stake. GAIL (India) and Gujarat State Petroleum Corp (GSPC) hold a 15.5% and 5% share, respectively.

It will mainly produce HDPE (swing and dedicated lines), LLDPE, PP, Benzene, Butadiene, Pygas and CBFS. FE had earlier reported that Kuwait National Petroleum Company, Qatar Petroleum and Emirates National Oil Company are among a clutch of oil companies in Western Asia which have evinced interest in a 26% stake in ONGC?s soon-to-be-commissioned R6,000-crore petrochemicals complex in Mangalore called OMPL.

ONGC plans to hold 46% in the petrochemicals venture, another 3% is to be held by ONGC?s subsidiary Mangalore Refinery and Petrochemicals (MRPL). The plan is to offer a 25% stake in OMPL to the public and find a partner/s for the remaining 26% stake.

OMPL was incorporated in December 2006 and is setting up an aromatic complex designed to produce 0.9 million tonne per annum (mtpa) of paraxylene and 0.3 mtpa of benzene. Feedstock for the complex would be supplied by the MRPL refinery situated adjacent to OMPL.

ONGC officials say apart from the money, an international investor brings in, it will also bring in experience of working on similar projects to the table.

ONGC?s Perspective Plan 2030 involves a plan to diversify into downstream ventures and aims to achieve 30% of group revenue from non-E&P (exploration and production) businesses. The diversification plan involves investments in alternate energy, LNG capacity and petrochemicals. It is also prompted by falling profits in the core business of crude oil sales, owing to rising subsidy burden.

As part of the diversification strategy, ONGC, along with Mitsui and BPCL is also considering setting up a 2.5 mmtpa LNG regassification terminal at Mangalore. It has also signed an MoU with BPCL for city gas distribution. ONGC has also signed an MoU with Chambal Fertilizers and Chemicals and the government of Tripura for a 1.3 mmtpa capacity urea fertiliser plant in Tripura.

RIL repairing 3 KG-D6 wells to boost gas output

Having reversed a decline in gas output at KG-D6 by starting a new production well, Reliance Industries is repairing three shut wells on the main fields in the block and will take up a similar number later to further improve output. RIL and partner BP are carrying out remedial action to stop water ingress from choking wells even as the first production well on the block in more than four years ramped up output by over 15% to 13.7 million standard cubic meters per day. ?We can’t drill any more wells on (main) Dhirubhai 1 and 3 (D1&D3) fields,” said RIL executive director PMS Prasad. The D1&D3 fields have proved to be less prolific than anticipated, forcing RIL to downgrade the recoverable reserves to 2.9 trillion cubic feet (tcf) from 10.03 tcf estimated in 2006. PTI