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Rediff News  All News  » Business » Oil blocks: ONGC's loss is RIL's gain

Oil blocks: ONGC's loss is RIL's gain

November 23, 2006 05:19 IST

In what could result in Reliance Industries Linited's virtual dominance of the deep-water Krishna Godavari and Mahanadi basins off the east coast of India, the Directorate General of Hydrocarbons has recommended that the company be granted seven highly prized assets in the region to prospect for oil and gas.

The authority has also dealt a severe blow to state-owned Oil and Natural Gas Corporation's plans. The DGH has rejected ONGC's bids for a dozen deep-water and four on-land blocks, despite the company being the top ranked bidder in every asset on account of concerns over its "past performance in deep-water exploration" and on the ground that it had relinquished four on-land blocks earlier.

Instead, DGH wants the 12 deep-water blocks to be given to some of the international exploration companies that had participated in the sixth round of the New Exploration Licensing Policy. It has also suggested that four on-land blocks be allotted to second ranked bidders -- Suiwah Corp of Malaysia, Kufpec-NTPC, Adani Enterprises, and HOEC-Tata-BPCL.

However, it has left the final decision to the Empowered Committee of Secretaries, which is scheduled to meet in New Delhi on Thursday. The authority has given clear recommendations for the award of a total of 36 exploration blocks (9 deep-water, 6 shallow and 21 on-land) to the top ranked bidders.

The recommendations have also dealt a blow to the hopes of Essar Oil by rejecting its seven deep-water bids on the ground that the company did not meet the eligibility criteria. However, Essar has been recommended for two on-land blocks. Of the total 14 bids rejected, the others included two by Niko Resources and bids by Tap Oil, Finder and M3Energy.

Not all of ONGC's hopes have been dashed, though. The DGH has recommended that the company be allotted 8 blocks (two shallow water and 6 on-land, of which in four it is an independent bidder). This was unlikely to be of much comfort to the company which, sources said, was expected to lobby hard to get the recommendations overturned. The company had hoped to win at least 24 blocks.

Among the other companies whose bids have been approved by the DGH are Reliance Natural Resources Limited (in partnership with Naftogaz-Geopetrol), which has been recommended allotment of an on-land block. The only other company to have been recommended for deep-water blocks (two on the north east coast) is Santos International of Australia.

Among shallow water blocks, GSPC, in partnership with IOC-GAIL-HPCL-Petrogas, is slated to win two, and the Cairn Energy-ONGC-Tata consortium, one block. Among the 21 on-land blocks, ONGC is slated to bag six, OIL-Suntera-Shiv-Vani, three blocks, and the GSPC consortium, two blocks.