ONGC splashes $1B on Deen Dayal West field acquisition

India’s ONGC will buy Gujarat State Petroleum Corporation’s stake and operatorship in NELP-1II Block KG-OSN-2001/3 in Krishna Godavari Basin offshore India.

ONGC on Monday said its Board had approved acquisition of the entire 80% Participating Interest (PI) of GSPC along with operatorship rights for $995.26 million for Deen Dayal West field in the block.

According to ONGC, GSPC has already built significant production facilities like well head platforms, process/living quarter platform, onshore gas terminal, export pipeline for transporting treated well fluid from process platform to onshore terminal etc.

ONGC will also pay part consideration of  $ 200 million to GSPC towards future consideration for six discoveries other than Deen Dayal West Field, which will be adjusted upon valuation of the these discoveries subsequent to approval their Field Development Plans by DGH / Management Committee of the Block.

The transaction would be documented by signing a Farm-in Agreement with GSPC. Requisite approval from the Government will be sought by GSPC in accordance with provisions of Production Sharing Contract of the Block.

“The acquisition of PI and operatorship rights in the Block fits well with the strategy of ONGC to enhance natural gas production from domestic fields on a faster pace, more so with a goal to reduce import dependency of hydrocarbons by the 10% by year 2021-22. The trial gas production from Deen Dayal West Field has already begun. Upon successful completion of the transaction, ONGC shall endeavour to bring the field on commercial production along with the existing partners in the Block,” ONGC said.

The Deen Dayal Field will act as a pivot in developing nearby HP-HT discoveries in Yanam and Godavari PML areas of ONGC, simultaneously, the company explained.

In a statement on Tuesday ONGC said there was also an opportunity to bring the Cluster-I gas discoveries of KG-DWN-98/2 NELP Block and adjacent nomination blocks on a fast track development through utilization of infrastructure of Deen Dayal West Field.

 

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