Photo caption: Oil platform
Global oil giants ExxonMobil, Shell, and BP have held initial talks with India’s state-owned Oil and Natural Gas Corporation (ONGC) about a potential partnership in the $5-billion KG-DWN-98/2 deepwater block in the Krishna-Godavari (KG) Basin, according to sources familiar with the discussions.
The KG block, located off India’s eastern coast, has struggled with delays and lower-than-expected production. ONGC is now seeking a global partner with the technical expertise and financial capacity to tackle the basin’s complex geology — particularly in Cluster 2, the only one currently producing oil and gas.
ExxonMobil is viewed as the leading contender, buoyed by CEO Darren Woods’ rare visit to New Delhi earlier this year. Shell and BP have also shown past interest in collaborating with ONGC, but Shell didn’t pursue an earlier opportunity at Mumbai High, and BP’s existing partnership with Reliance in an adjacent KG block — entangled in a legal dispute with ONGC — may complicate matters.
Unlike previous technical advisory arrangements, any KG Basin partnership will likely require significant capital investment from the foreign partner. Drilling costs in the region are more than ten times higher than at Mumbai High, making passive advisory roles financially untenable.
However, selling a direct participating interest is also challenging due to ONGC’s public sector status and the regulatory scrutiny it invites. Negotiators are said to be exploring a new partnership structure that balances risk-sharing with institutional safeguards.
The KG-DWN-98/2 block currently produces 33,000 barrels per day of oil and 2.5 mmscmd of gas — far below the 2016 peak forecasts of 70,000 bpd and 16.3 mmscmd.
=== Oilprice.com ===
