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IndiaTimes: ONGC plans to pick 33% in Shell’s Egyptian gas block

AGENCIES[ FRIDAY, APRIL 27, 2007 12:00:00 AM] 

NEW DELHI: Oil and Natural Gas Corporation (ONGC) is firming up a proposal to buy up to 33% in an Egyptian deepwater gas block from operator Royal Dutch Shell, sources said on Thursday.

“Talks are at an advanced stage. Very soon a high-level government panel will take a decision whether to allow ONGC to go ahead with the offer or not,” a source involved in the planned deal said. The value of the possible transaction was not known.

The deal for a stake in Shell’s North East Mediterranean Deepwater (NEMED) block is not being opened to bidding, and no swap arrangement between the two firms is involved, said sources. Shell has announced the block, in which it holds 84%, has probable reserves of 15 trillion cubic feet, according to a US Department of Energy website. The block holds initial in-place reserves of more than 1 tcf with “sizeable upside”, added sources.

Malaysian state oil and gas company Petronas owns the remaining 16% in the deepwater concession, which was awarded in 1999. ONGC Videsh (OVL), the overseas investment arm of ONGC, has to obtain government permission for any deal that exceeds either $75 million or Rs 300 crore, whichever is the lower figure.

ONGC Videsh has been asked to target production of 6.34 million tonnes of oil and 1.65 billion cubic metres of gas in the 2007-08 fiscal, the government said on Thursday.

To secure more equity oil, the company is pursuing oil and gas assets in Sudan, Iran, Iraq, Nigeria, Algeria, Egypt, Syria, Libya, Russia, Venezuela, Kazakhstan, Azerbaijan. A deal would be ONGC’s second overseas tie-up with Shell and would land the company its second Egyptian asset.   

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