ONGC plans to acquire 33 per cent in Shell''s Egypt gas field

Mumbai: ONGC Videsh Ltd, the overseas arm of Oil and Natural Gas Corp (ONGC), plans to acquire 33 per cent stake in Royal Dutch/Shell''s deepsea gas field in Egypt for $160 million.

Shell is the operator, with 100 per cent stake in the North East Mediterranean deepwater concession in Egypt, code-named ''Project Wonder''. The block has estimated gas reserves of close to 10 trillion cubic feet.

"We are not paying Shell for buying the stake but have agreed to pay for its share of exploration cost in 2007 of $140 million and a maximum of $40 million for future cost beyond 2007," an OVL executive said.

OVL will not contribute toward the past costs ($300 million) incurred by Shell till October 1, 2006. OVL will, however, pay development bonus to Shell up to a maximum of $19.425 million at the time of award of development lease by the local government and $35.343 million production bonus at the time of start of commercial production.

Petronas of Malaysia, which has a pre-emption right, can match OVL''s bid within 30 days.

"Shell has till now drilled five wells on the block and established presence of 1.9 tcf of in-place reserves. We estimate at least 9.62 tcf of reserves in the block, with an upside of 19 tcf," the executive said.

Gas production from the discoveries is planned in 2012 with peak output of 330 million standard cubic feet per day. "The project has possibility of converting gas into LNG and exporting. We would like to take LNG to India," he said.