UK's BG Group, BHP sign pact with govt for oil exploration off Mumbai

UK's BG Group and BHP Billiton of Australia, the only international majors to bid for Indian oil and gas blocks in recent times, today signed a contract to explore in deep-seas of Mumbai.

BG-BHP signed a Production Sharing Contract (PSC) with the Government for deep-water block MB-DWN-2010/1 in the Mumbai basin that they had won in the 9th round of bidding under the New Exploration Licensing Policy (NELP), the company and the government said in separate statements said.

BG India and BHP hold 50 per cent interest each in the block.

Located about 350 km offshore from Mumbai, Block MB-DWN-2010/1 is a large, deep-water block and covers 7,963 sq km in water depths varying from 2,900 to 3,200 metre.

"This block represents BG India's first deep-water operated exploration license on the west coast of India," BG India President and Managing Director Shaleen Sharma said.

BG currently holds a deep-water exploration block in Krishna Godavari basin off the east coast but work hasn't started because of delays in getting clearances.

"We have committed to do a 2,000 line kilometre of 2D seismic survey and 2,000 square kilometre of 3D seismic besides drilling one well in the five year phase-I exploration," BG India Vice President (Exploration) Goutam Ghosh said.

Sharma said the signing of the PSC showed that BG continues to stay invested in India as it believes in the long term growth story of the country.

BG, he said, has globally decided to exit downstream fuel retailing business and it was as part of this exercise that it is selling its stake in Gujarat Gas Co Ltd (GGCL).

Upstream oil and gas exploration and LNG sourcing and marketing would be BG's focus in India, he said.

In all, the Government had offered 34 areas for exploration and production of oil and gas in NELP-IX in 2010; bids for 33 blocks were received at the close of bidding on March 28 last year.

Of these, 16 blocks were awarded to firms such as ONGC and Oil India, while bids for 10 blocks were rejected due to bidders offering lower-than-expected profits. But PSCs for only 14 were signed.

The Cabinet Committee on Economic Affairs (CCEA) last month approved award of five more blocks, taking the number of blocks awarded in NELP-IX to 19.

In the previous eight rounds of NELP, 235 blocks were awarded.

Sharma said BG India would begin work shortly on the Block and plans to undertake preparatory work and seismic surveys in order to capitalise on the weather window available post-monsoon 2012.