Photo by: Bloomberg
KOLKATA (miningweekly.com) - India has offered mining giant BHP Billiton a collaboration with domestic exploration and production (E&P) major ONGC Limited to lure the major back to the nine oil and gas blocks it relinquished in October.
India’s Petroleum and Natural Gas Ministry said that an alliance between ONGC and BHP Billiton would be mutually beneficial, as the domestic E&P major needed oil and gas blocks, while the Anglo-Australian resource major could depend on the Indian company to address the reasons that led it to exit from the nine blocks.
The collaboration offer was the first definitive overture to BHP after the Indian government decided to woo back the resource company and avoid sending out negative signals to prospective global investors, as reported by Mining Weekly Online last month.
ONGC, for its part, has assured that it would examine the blocks relinquished by BHP and, as a domestic operator, would use its experience in securing clearances, addressing the delays that led the foreign resource company to give up the blocks.
However, there was no clarity on whether such a collaboration would entail ONGC picking up an equity stake in the nine blocks, which would need the nod from BHP, or whether it would be a strategic partnership in which ONGC would be a facilitator, without a share in production, in proportion to its financial stake.
In October, BHP surrendered the nine exploratory blocks with an estimated 10-billion barrels of oil equivalent, after a global review of its exploration portfolio and the inability to carry out exploratory work, following delays in securing various clearances, particularly from the Indian defence establishment.
The resource giant was awarded six blocks under the seventh auction round, under by the New Exploration and Licensing Policy (NELP), and three under the eighth round.
Officials said that the Ministry had pulled out all the stops to woo back BHP since the government had already announced timelines for the tenth auction round under the NELP, which would see 86 blocks put up for bids in January 2013. The return of the foreign resource major would send out a positive signal for the greater participation of foreign investors in the auction.
The government’s urgency was also explained by the fact that if all 86 blocks were up for bids - subject to all securing clearances from various government agencies - it would be the largest auction of oil and gas blocks by India, and the government could not risk low interest from overseas investors, although 100% foreign ownership had not been permitted, officials said.