Is India’s ONGC’s partnership with ConocoPhillips coming to an end?

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Source: DollarPhotoClub

The partnership between India’s biggest energy explorer, Oil and Natural Gas Corp. Ltd (ONGC), and ConocoPhillips, the world’s fifth largest independent oil and gas exploration firm, appears to be drawing to a close.

The partnership dates back to March 2012 when the two companies signed an agreement to share technical expertise on deep-water and shale gas explorations, as well as jointly bid for shale gas assets overseas.

“India has a lot of potential in shale gas. We want to exploit that with the technical expertise of ConocoPhillips,” ONGC’s chairman, Sudhir Vasudeva, said at the time, adding that ONGC will not benefit financially from the partnership in the near future.

The difficulties with their overseas partners is something of a recurring motif for ONGC, which tried and failed to strike similar collaborations with other oil and gas majors including Exxon Mobil Corp., Petrobras SA, BG Group Plc, Eni SpA, Royal Dutch Shell Plc and Statoil ASA. Among the partnerships that never saw the light of day were those with Rocksource ASA of Norway and Inpex Corp. of Japan.

“We are doing it alone. We have the technology and expertise for developing deep water blocks and reservoir management and, hence, we are doing it ourselves,” said T.K. Sengupta with regard to the ConocoPhillips partnership, although he probably was not referring to the shale aspect of the collaboration.

According to Live Mint, ONGC is currently investing Rs.40,000 crore on developing the Krishna-Godavari basin KG DWN 98/2 block and is planning to submit a field development plan of the area by the second half of the year. The company hopes to start production by 2018-19, Sengupta said. However, the last of the three development clusters within the field will not be currently explored as ONGC does not have the technology, said Sengupta.

India, the world’s fourth-largest oil importer, which meets about 80 percent of its crude needs through overseas purchases, holds an estimated 500 to 2000 trillion cubic meter of recoverable shale gas, predominantly in the Cambay Basin in Gujarat, the Assam-Arakan basin in northeast India, and the Gondwana Basin in central India.

However, India lacks the necessary expertise to tap these shale reserves. What is more, a marked lack of a policy framework and resource estimates have effectively scared away exploration companies, which prefer to bet on overseas shale properties in the U.S. India’s Reliance Industries has already secured stakes in shale assets in Mexico and the U.S. – although they have been shedding some of these properties lately.

At present, the prospect for shale exploration in India does not look promising: “We are currently in the initial phases of shale exploration and so far it has not been very encouraging. It will take a very long time to ascertain whether there is any commercial prospect in India,” one executive told Live Mint on condition of anonymity as he is not authorized to speak to the media. He did confirm that there was virtually no collaboration happening with ConocoPhillips on any front in India.

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