BP plc’s proposal for a technical tie-up with Oil and Natural Gas Corporation for a block in the Kutch area of Gujarat has been approved.
If oil’s found, UK major will get first right to match the best bid that ONGC gets for it
An empowered committee of secretaries (ECS) has approved BP plc’s proposal for a technical tie-up with Oil and Natural Gas Corporation for a block in the Kutch area of Gujarat.
The British petroleum major will have the right to match the successful bid for the block in case it is put up for bidding after studies show the presence of hydrocarbon.
BP had been seeking government approval since a long time for this, but all its earlier attempts were rejected.
The ministry of petroleum and natural gas decided to seek ECS nod for the proposal after BP revised its original blueprint. Now it would be put up for the approval of the Cabinet Committee on Economic Affairs.
BP will carry out a joint technical study with ONGC for the Kutch block, called GK-DW-1. The British major alone will bear the cost of the exercise. However, according to the ECS decision, in case any lead about oil and gas is found during the study, ONGC will have to seek government approval for inviting bids for exploration, development and production in the block on a competitive basis.
If BP loses the bidding process, the winner would reimburse it the cost of study. The company, which had done a successful study in the adjoining Indus Cone region in Pakistan, was invited by ONGC for a strategic alliance last year on a single-tender basis.
BP later proposed profit sharing varying from 15% to 65% with the government. It also offered $1 million upfront payment and a discovery bonus per barrel to ONGC. But the government rejected the proposal.
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