Shell, ONGC discuss Indian oil, gas opportunities
By SELINA WILLIAMS and BIMAN MUKHERJI
LONDON -- Royal Dutch Shell said Thursday it has been in discussions with India's state-run Oil & Natural Gas Corp. about potential opportunities as it seeks to expand its presence in India, one of the world's fastest growing economies and where energy demand is expected to more than double over the next 25 years.
Executives at ONGC said they were in the process of agreeing to a long-term alliance with Shell to jointly explore oil and gas production and were looking at both existing and new projects, but added that it was too early to say what form a potential tie-up will take.
If talks between Shell and ONGC are successful, it would mark Shell's return to exploration in India some 16 years after it sold its 50% stake in Rajasthan assets to Cairn for $7.5 million. The Rajasthan fields last year reached 175,000 bpd of crude oil production and Cairn aims to increase that to 300,000 bpd.
Talks between Shell and ONGC also mark increased interest on the part of big international oil companies in the country's oil and gas sector and come as falling output from India's largest gas deposit in the Krishna-Godavari basin in the Bay of Bengal has hit supplies to the power and fertilizer sector.
The government of the energy-hungry nation is seeking to reduce dependence on oil and gas imports and is currently proposing to allow gas prices in India to be benchmarked to global rates, which would lead to an increase in prices and would benefit the companies involved in extraction.
In February, BP and Reliance Industries said they planned to jointly invest more than $5 billion over the next three to five years to boost declining gas output in the KG D6 block in the Krishna-Godavari field off India's east coast.
In 2011, BP spent $7.2 billion buying a 30% stake in 23 oil and gas production sharing contracts that Reliance operates in India, including the producing KG D6 block. The two companies also formed a joint venture to source and market gas in India.
In India, Shell currently has a small retail presence and is involved in developing a liquefied natural gas import and regasification terminal at Kakinada in Andhra Pradesh.
Dow Jones Newswires
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