By SELINA WILLIAMS and BIMAN MUKHERJI
LONDON -- Royal Dutch Shell said Thursday it has been in
discussions with India's state-run Oil & Natural
Gas Corp. about potential opportunities as it seeks to
expand its presence in India, one of the world's fastest
growing economies and where energy demand is expected to more
than double over the next 25 years.
Executives at ONGC said they were in the process of agreeing
to a long-term alliance with Shell to jointly explore oil
production and were looking at both existing and new projects, but added that it was too
early to say what form a potential tie-up will take.
If talks between Shell and ONGC are successful, it would
mark Shell's return to exploration in India some 16 years after it sold
its 50% stake in Rajasthan assets to Cairn for $7.5 million.
The Rajasthan fields last year reached 175,000 bpd of
crude oil production and Cairn aims to increase that to 300,000
Talks between Shell and ONGC also mark increased interest on
the part of big international oil companies in the country's
oil and gas sector and come as falling output from India's largest gas deposit in the
Krishna-Godavari basin in the Bay of Bengal has hit supplies to
the power and fertilizer sector.
The government of the energy-hungry nation is seeking to
reduce dependence on oil and gas imports and is currently
proposing to allow gas prices in India to be benchmarked to
global rates, which would lead to an increase in prices and
would benefit the companies involved in extraction.
In February, BP and Reliance Industries said they planned to
jointly invest more than $5 billion over the next three to five
years to boost declining gas output in the KG D6 block in the
Krishna-Godavari field off India's east coast.
In 2011, BP spent $7.2 billion buying a 30% stake in 23 oil
production sharing contracts that Reliance operates in
India, including the producing KG D6 block. The two companies
also formed a joint venture to source and market gas in
In India, Shell currently has a small
retail presence and is involved in developing a liquefied natural
gas import and regasification terminal at Kakinada in
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