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Money > Reuters > Report October 3, 2001 |
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BG of UK to buy India Enron Oil assetsUK gas and oil producer BG Plc on Wednesday said it had agreed to buy US-based Enron's oil and gas assets off India's west coast for $388 million to complement its 10-year-old interests in gas distribution there. Enron Oil and Gas India Limited has a 30 per cent interest in the Tapti gas field and the Panna Mukta oil and gas field north west of Bombay, and a 62.4 per cent interest in the CB-OS/1 exploration licence further north off the state of Gujarat. Enron's majority owned Dabhol Power Co project, currently embroiled in a dispute with local customers over pricing of its electricity, is not part of the deal. The acquisition depends on some regulatory consents, and on confirmation from EOGIL joint venture partners to allow it to continue as operator of the fields. ONGC OBSTACLE? This could be a problem, because according to industry sources in Bombay speaking after BG's announcement, ONGC, the state-controlled energy group which is one of EOGIL's partners, still wants to take over operatorship. ONGC declined to comment. But in August company officials expressed an interest in the operatorship. BG said the deal would make it the biggest upstream energy foreign investor in India, with interests in fields that produce 10 per cent of the nation's existing needs and have significant expansion capacity. "There is currently a deficit between the supply of gas, which is currently all indigenous gas, and the need for gas within India," said David McManus, BG's executive vice president with responsibility for India. Some energy analysts see demand doubling in India over the next 10 years, making it one of the world's fastest growing energy market. BG is already developing Liquefied Natural Gas import facilities and last month its 65 per cent owned Gujarat Gas Company struck a deal to buy gas from another west coast field, Lakshmi, with British group Cairn Energy and its partners there. "What this additional gas will do is create the marketplace in advance of LNG imports coming in behind it and in fact will fill the supply deficit that currently exists," said McManus. Enron has been looking to exit the upstream sector in a number of countries worldwide to focus on its core energy marketing and trading skills. BG's pipeline interests in India date back to its time as British Gas, a former state-owned gas utility. BG has since spun off its UK utility connections into Lattice Plc and Centrica. But it continues to pursue a strategy of monetising its gas production down through the supply chain into pipelines, power stations and LNG elsewhere in the world, styling itself as an 'integrated gas major'. The deal would add five percent to its total production profile with some 19,000 barrels of oil equivalent a day of which 60 per cent is currently gas. The company recently outlined plans to grow production at 11 per cent a year over the period 2000-2006, one of the fastest growth targets in the sector.
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