RIL, ONGC woo Chevron for joint Nelp VII bids

MUMBAI: India's biggest firm Reliance Industries (RIL) and state-owned major Oil and Natural Gas Corporation (ONGC) are wooing US major Chevron Corporation to jointly bid for oil and gas exploration blocks.

The bidding for the seventh round under the Nelp (National Exploration and Licensing Policy) is expected later this month. Chevron, however, is cool about the offers. It is more interested in bidding for discovered fields where the risk is less and the payback period is shorter.

Both RIL and ONGC have invited Chevron in order to avail of Chevron's expertise and advanced technology in the deep water exploration. It is learnt that one of the company has also agreed to the extent of offering operatorship of the block to Chevron, if the bid is successful.

RIL did not respond to an email questionnaire on the issue but RIL's president, petroleum business, PMS Prasad had earlier told this paper about jointly bidding with Chevron for Nelp VII. ONGC sources confirmed of having approached Chevron for Nelp VII bids.

"They (Chevron) are not interested in bidding for exploratory blocks. They are only interested in picking up stakes in discovered fields," said the ONGC official.

The government is likely to offer over 60 exploration blocks, comprising of 30 onshore blocks, 15 shallow water blocks and 15 deep and ultra-deep water blocks in both east and west coast offshore area. This comes at a time when Chevron is considering selling its 5% stake in Reliance Petroleum (RPL), which it bought last year for $300 million.

Chevron had bought a 5% stake in RIL's subsidiary Reliance Petroleum (RPL's), 27 mmtpa refinery for $300 million with the option to increase its stake to 29%.

However, with RPL's stock zooming to unexpectedly in the last one year, Chevron will have to shell out over $5.5 billion to buy additional 24% stake at current prices. This means Chevron will have to pay $5.8 billion for 29% stake in RPL, which is the close to entire project cost of the refinery.

RIL has already signed a memorandum of understanding (MoU) with Chevron to collaborate in the energy value chain. In April 2006, RIL had also signed an agreement with Chevron to optimise the crude supply and the product offtake and marketing of the RPL refinery but nothing has moved so far.

Chevron is one of the 12 short listed companies by Gujarat State Petroleum Corp (GSPC), which is willing to dilute upto 30% stake in Krishna Godavari (KG) Basin discovered gas block.