Myanmar asks ONGC, GAIL to reduce stake

Sources: Times of India

Not satisfied with denying New Delhi gas from fields where two Indian companies have stake, Myanmar's national oil company has enforced a contractual provision to reduce equity held by flagship explorer Oil and Natural Gas Corporation (ONGC) and state-owned gas utility GAIL in the A-1 and A-3 acreages.

ONGC's overseas investment arm, ONGC Videsh, held 20% and and GAIL 10% in both the offshore concession which is estimated to have a reserve of 4.53 tcf (trillion cubic feet) of gas. The Myanmar national oil company MOGE has exercised the "step-in" clause in its production sharing contract with ONGC and GAIL to reduce their stakes. ONGC Videsh is now left with 17% and GAIL 8.5%, an executive of a Korean company, which is part of the consortium developing the field said on the sidelines of the 19th World Petroleum Congress.

Executives of Indian partners in the fields, however, played it cool saying this was part of the contract and they were expecting it since work in the acreges has reached the production phase. South Korea's Daewoo International, which heads the consortium with 60% stake and is the operator, had last fortnight formally entered into a deal with state-run PetroChina for selling gas from the field expected to flow by 2013. Another Korean firm, KOGAS, has 10%.

The MOGE move has also affected the Korean firms, with Daewoo's stake getting lowered to 51% and KOGAS equity down to 8.5%. The lower equity also means a proportionate reduction in revenue from gas sales.