OREANDA-NEWS. June 22, 2011. ONGC Ltd is in talks with UK-based BG Group and Italy’s Eni to sell up to 30 per cent in its gas block off the east coast. It wants to use the expertise of these foreign firms in deep water drilling. “The stake sale can go up to 30 per cent. We have not decided yet on the quantum. It will be discussed by the board,” ONGC chairman A.K. Hazarika said. He said the talks were on with Eni and BG Group only.

Earlier, Exxon Mobil and BP were eyeing stakes in the KG-DWN-98/2 block. Brazil's Petrobras and Norway's Statoil have exited the block, and Cairn India is a 10 per cent partner. Hazarika said the stake sale would help ONGC to finance planned investments of about USD 7.7 billion to develop the gas field over four to five years.

The block has in-place gas reserves of 3.42 trillion cubic feet (tcf) and of this, 1.904 tcf is recoverable.  The upstream oil and gas major plans to produce 25-30 million standard cubic metres per day of gas from the block by 2016-17. The Krishna-Godavari basin has the country’s most prolific gas reserve and is home to some of the biggest natural gas discoveries in recent years.

Reliance Industries’ KG-D6 block has an estimated gas reserve of 40 tcf. It has sold 30 per cent stake to BP to gain the UK-based firm’s deepwater expertise. Reliance is awaiting government approval for the deal. Meanwhile, ONGC’s follow-on public offer is likely to hit the market by mid-July as the government has appointed new independent directors to meet regulatory listing rules.

“The ministry of petroleum and natural gas has appointed former RBI deputy governor Usha Thorat, Deepak Nayyar (ex-vice-chancellor of Delhi University) and Arun Ramanathan (former finance secretary) as non-official part-time directors on the board,” ONGC said. ONGC had six functional directors, two government nominees on the board and five independent directors. It needed three more independent directors to have an equal number of independent directors -- a must under Sebi guidelines for listing.

The government, which owns 74 per cent of ONGC, wants to sell 5 per cent of its stake as part of the divestment plan to raise Rs 40,000 crore this fiscal to fund social welfare and infrastructure projects.