British Gas to buy stake in oil venture

By Our Special Correspondent

NEW DELHI, OCT. 3. The controversy-embroiled Enron Corporation has entered into an agreement with British Gas India for the sale of interests in Enron Oil and Gas India Ltd. (EOGIL) for $388 million. However, the sale is subject to a number of conditions and consents, including confirmation from joint venture partners of EOGIL's continuation as operator of the oil and gas fields.

The assets owned by EOGIL are 30 per cent in Tapti gas field and the Panna/Mukta oil and gas field and a 62.64 per cent interest in the CB-OS/1 exploration licence. All these properties are located on the west coast of India and EOGIL is the operator of these assets. However, the public sector company, Oil and Natural Gas Corporation (ONGC) also holds 40 per cent stake in the Tapti and Panna/Mukta offshore operations and has staked its claim to be the operator. The other stakeholder in the oil properties is Reliance Industries with 30 per cent share while the other partners in the CB-OS/1 licence are Hindustan Oil Exploration Company (17.36 per cent), Tata Petrodyne (10 per cent) and ONGC (10 per cent). Reliance has also declined to comment on whether the operating rights would be with EOGIL.

Announcing the purchase agreement, the Vice President of British Gas India, Mr. Nigel Shaw, said his company was hopeful of concluding the deal swiftly but added that if the other partners in the venture do not agree to giving EOGIL the company operating rights, the deal would not go through. ``This acquisition and the recent gas sales agreement for supply from the Lakshmi field are complementary to our gas distribution activities in south Gujarat and Mumbai,'' Mr. Shaw added.

The gas output from the Tapti and Panna/Mukta fields is contracted to Gas Authority of India Ltd. and processed at Hazira through the offshore south Bassein-Hazira trunkline. The oil is sold to Indian Oil Corporation and tankered to its refineries. The production from these fields during April-March 2001 totalled an average of 70 million standard cubic feet of gas a day and 8,200 barrels of oil per day.

Enron, which was the operator of the fields, had in October last year sought Government permission to withdraw from the Tapti and Panna/Mukta fields as part of its international reorganisation plan to exist certain lines of operations.

According to sources, there were also differences between the three partners about the prospects and exact reserves in place in the two oil and gas fields. There was also a controversy about the cost of the project as ONGC and Reliance were of the view that EOGIL was not operating the fields in a cost effective way. Enron is reported to have gone in for arbitration against ONGC and Reliance for not paying the expenses incurred by them.

As is well known, Enron Corporation is also engaged in a legal battle with the Maharashtra State Electricity Board (MSEB) where the two are in partnership for the Dabhol Power Project.

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