State-run explorer Oil and Natural Gas Corporation (ONGC) is yet to decide on selling its stake in the Mehsana block in the eastern flank of the Cambay basin of Gujarat to its partner Essar Energy.
It is learnt that Essar, which owns 70 per cent stake in the block, wants to take full control of it. The government is learnt to have awarded the block prior to the New Exploration and Licensing Policy. Essar signed a 25-year production sharing contract with the Union government and ONGC in July 1998.
It is learnt that Essar wants to take the entire area on a “sole risk” basis, under which it make all the investments for developing the block and assume responsibility for paying all government levies and cesses.
According to media reports, Essar energy wants to control the block because it feels ONGC was taking a lot of time make key decisions.
Further, Essar feels that ONGC is not interested to develop the block given its marginal status (just two million barrels of reserves).
Essar is currently producing crude oil from one of its fields, being sold to a government-owned refinery. Two more discoveries in the block have been notified and are being assessed for commercial viability.
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