The Hindu Business Line : Shell offers business model on profit-sharing to ONGC

Overseas opportunities
Earlier this year ONGC and Shell Exploration Company B.V. had inked an understanding to examine significant opportunities for future co-operation both in India and other countries.

New Delhi , Sept. 28

In order to overcome any bottlenecks on their joint co-operation in exploration and production (E&P) activities Royal/Dutch Shell has offered ONGC a business model of profit sharing for any enhancement in productivity.

Sources told Business Line that ONGC is considering Shell's proposal based on a framework outlined by the latter. The two companies have been holding high-level discussions on the issue.

Indications are that ONGC was not open to going beyond Government prescribed norms on making joint investments and giving operatorship of the fields. However, ONGC has said that it was ready to share any enhancement made on planned profile of a field with Shell.

Opportunities

The steering committee set up by the two entities to manage co-operation between the two companies, following a memorandum of understanding inked between the oil sector behemoths, is looking into these aspects. Opening the doors for a possible participation in overseas projects as well as domestic ventures, earlier this year ONGC and Shell Exploration Company B.V. (subsidiary of the world's third largest petroleum group Royal Dutch Shell) had inked an understanding to examine significant opportunities for future co-operation both in India and other countries.

The MoU covered wide areas of cooperation across the full range of upstream and downstream activities, including exploration and production, coal gasification, natural gas, oil products, refining and petrochemicals. The areas of cooperation in the upstream sector included investigation of increasing and enhancing production from existing producing fields in the country, joint bidding in exploration acreage rounds in India.

The cooperation also includes farming into existing, but undeveloped Indian exploration blocks, investigation of opportunities for cooperation and joint participation in international upstream ventures from Shell and ONGC's portfolios, and evaluation of a joint project for coal gasification facilities in the country.