ONGC arm to buy stake in Egyptian gas field

15 June 2007

Mumbai: The government has cleared a proposal by ONGC Videsh Ltd (OVL), overseas arm of the state-run Oil and Natural Gas Corp (ONGC), to acquire 33 per cent stake in a gas field in Egypt from Royal Dutch Shell, official sources said.

ONGC Videsh Ltd (OVL), the sources said, will be paying between $160-$175 million to acquire Royal Dutch/Shell''s 33 per cent stake in a deep-sea gas field off Egypt.

The cabinet committee on economic affairs (CCEA) chaired by prime minister Manmohan Singh approved the proposal at its meeting on June 15.

Code-named ''Project Wonder'', the North East Mediterranean Deepwater Concession in the Egypt Mediterranean Sea, has Shell as operator with 100 per cent stake. The gas field is estimated to hold close to 10 trillion cubic feet reserves.

An OVL official said the company would not pay Shell for buying the stake but for its share of exploration cost in 2007 of $140 million and a maximum of $40 million for future cost beyond 2007.

Also, OVL would not pay toward the past costs (about $300 million) incurred by Shell till October 1, 2006 .