ONGC rejects British Gas cash offer

NEW DELHI, NOV. 28. Oil and Natural Gas Corporation (ONGC) is understood to have rejected British Gas India's (BGI) cash offer of $8.4 million along with waiver of disputed claim for taking over operatorship of the Panna, Mukta and Tapti oil and gas fields.

Sources close to negotiations said ONGC board felt the offer would have been meaningful had the ongoing arbitration case with Enron, whose stake British Gas is seeking to buy, was going against the PSE and added that initial indications were that ONGC was on a strong wicket.

ONGC board yesterday decided that the opertorship of the oilfields could not be given in lieu of the new offer by BGI.

When contacted ONGC chairman Mr. Subir Raha told PTI ``We attach high value to these fields. We are confident that we can operate these assets as well as anybody else.'' The tough line taken by ONGC comes in the wake of BGI setting a deadline of November 30 for settling the issue as part of deal to go ahead with buying out 30 per cent Enron stake in the fields for $388 million.

Mr. Raha said ``We have decided that the best offer of BGI is not sufficiently responsive to agree on their proposal for operatorship," and added that ONGC's decision was communicated to British Gas last night.

Withdrawing its earlier offer of giving 10 per cent stake to ONGC in a gas exploration project in Brazil and jointly taking up deepwater exploration studies, BGI had made the new proposal as part of efforts to settle the ongoing dispute between the three partners on operating dues.

BGI had offered $8.4 million in cash and waiver of $7.5 million cash-call dispute to ONGC after the largest the equity holder in Panna, Mukta and Tapti fields termed it as ``inadequate'' BG's offer of stake in exploratory blocks in Brazil and joint study programme for Indian deepwater Acreage.

While ONGC's insistence on participation in proven discovered fields in lieu of forgoing its claim for operatorship forced British Gas to amend its initial offer, the global gas major, which had made sole operatorship a precondition for buying Enron stake, has now set November 30 as the deadline for settling the issue, sources said.

ONGC, which has 40 per cent interest in the fields, would not withdraw its claim on operatorship. Sources said ONGC board was of the opinion that the Navaratna oil company had a strong case in the $7.5 million cash-call dispute, which is at present in courts.

Enron, the operator of the fields, had made cash calls of 7.5 million dollar on ONGC and $6.5 million on Reliance (the third partner in the joint venture) for redevelopment work of the fields three years back, sources said, adding both ONGC and Reliance disputed Enron's claim as the development programme was not approved by the operating and managing committee of the Panna, Mukta and Tapti oil and gas fields.

ONGC made a counter-claim of $11 million on Enron and the issue is now in courts. ONGC has solicitated legal opinion which has found Enron on weak grounds, sources said.

While BGI chief operating officer Mr. Nigel Shaw was abroad, his company did not comment on ONGC board's decision and said ``discussions were on.'' Having extended the October 31 deadline to settle the issue by one month, BGI is insisting that the entire deal of buying Enron's stake was with the condition that it would come with the operatorship. ``If this does not happen, the deal falls through,'' sources said.

Sources said once ONGC is ready to waive its claim on operatorship, it would not be difficult for BGI to convince Reliance too by offering similar options.

- PTI

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