State-run Oil and Natural Gas Corporation (ONGC) will shortly farm out nearly 26 per cent stake in its KG-DWN-2004/6 block in the Krishna-Godavari basin to Japan's Inpex Corporation.
ONGC has been trying to involve international exploration and production companies in its operations.
"Inpex is an experienced global player. ONGC will stand to gain from their experience and technology," an ONGC executive said. The company is looking at selling stakes in other blocks as well."Inpex shall be on board shortly.
The company will carry us to the well now. They will bear the well commitment cost as an entry fee to this whole business. They will fund us for that. They are also a partner for a technology tie-up," another senior ONGC executive told Business Standard.
Inpex Corporation is a Japanese company engaged in the energy supply business on a global scale.
Its operations include acquisition of licence blocks for oil and gas fields, exploration, production and the sale of processed products. It has business operations covering about 70 projects in 26 countries, says its website.
Being an exploration block, the deal has been structured in such a way that Inpex will pay ONGC what it has spent on the block in the past proportionately and also meet future expenses according to its share.
"The past cost is to be paid anyway. They will fund what we do in future in proportion to their share," the executive added.
ONGC is the operator of the block with 60 per cent stake. After the deal, ONGC will hold 34 per cent stake in the block.
Its other partners in the block - Gujarat State Petroleum Corporation, Hindustan Petroleum Corporation, Oil India and GAIL - hold 10 per cent stake each. The costs are equally divided among all partners.
An ONGC spokesperson did not respond to a query sent. ONGC will take the matter to the board of directors shortly.
After the board approval, the company will seek the oil ministry's go-ahead. A person close to the deal said ONGC's partners in the block were not comfortable with the farming out more of than 26 per cent stake.
The deep-water block is located in the Krishna-Godavari basin and was awarded to ONGC and four partners during the sixth edition of the New Exploration and Licensing Policy (Nelp-VI). The production-sharing contract for the block was signed on March 2, 2007.
