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The Oil and Natural Gas Corporation is in talks with Reliance Industries to jointly participate in exploration and development projects abroad, particularly in the US and Africa.
"ONGC Videsh, the wholly owned subsidiary of ONGC, and Reliance Industries, are identifying blocks in the US for exploration and development projects. A gas field has been identified in Philadelphia for joint participation," an ONGC executive said.
"Backed by ONGC, the tie-up will get the sovereign guarantee of the government, while Reliance will be able to draw on its expertise and connections in the US," the executive pointed out. The ONGC spokesperson said she did not have anything to add. Reliance did not respond to e-mails sent to it on Friday.
The companies stand to gain if the alliance works since they have similar objectives -- to be in the global league in oil and gas exploration.
They are either planning to take equity in oil and gas blocks or to pick up equity in exploration and production companies.
ONGC Videsh has envisaged bringing into India 60 million tonne of oil equivalent per year by 2025. It is close to reaching its strategic objective of sourcing 20 million tonne of equity oil abroad a year.
So far, ONGC Videsh has acquired 11 properties in 10 countries, including Vietnam, Russia, Sudan, Iraq, Iran, Libya, Syria and Myanmar.
It is pursuing more than 15 oil and gas exploration blocks in Algeria, Indonesia, Nepal, Libya, Iran, Russia, the UAE, Venezuela and Vietnam. Reliance is also planning to achieve energy security for its 27 million tonne refinery at Jamnagar in Gujarat.
In his speech to shareholders on June 24, Mukesh Ambani, Chairman and Managing Director of Reliance Industries, said: "We are looking at value generation opportunities overseas as tools for energy security for the company and for the country. Our plan is to achieve 30 per cent energy security for the Jamnagar refinery within the next 10 years and up to 50 per cent by the year 2020. This will be achieved through the acquisition of small and medium sized oil companies and participation in exploration and development projects. Geographically, the regions of focus are Africa, Middle East, Australia and Latin America."
Both the companies had earlier bid, along with an Algerian oil company, for projects in Iraq. However, this project is on the backburner because of the political sanctions Iraq is subject to.
Reliance has already struck oil in an onshore block in Yemen, where it holds a 25 per cent interest. The share of recoverable oil reserves for Reliance from this block is estimated to be about 50-60 million barrels.