Public sector ONGC and Mukesh Ambani-led Reliance Industries Ltd (RIL) have agreed to share infrastructure in the KG Basin, following tough negotiations lasting for six months brokered by DG Atanu Chakraborty of the Directorate-General of Hydrocarbons (DGH).
The agreement or MoU will facilitate RIL and its partner BP Plc transport gas from their newer fields in Krishna Godavari Basin (KG-D6) block using a sub-sea pipeline passing through edges of ONGC's block in the neighborhood. The DGH recently gave its nod to the contractors for the right of use.
The concept of infrastructure-sharing is very common among international players in oil and gas exploration and production business, as it brings down cost. In India, it has been arbitrary, a senior official in the DGH said, adding that it also leads to duplication of facilities as each would like to create their own infrastructure.
Since everything comes at a cost, under the MoU signed, the user will have to pay. An official involved with the development said in case of Discovered Marginal fields, "it was decided it will be based on incremental cost plus a small overhead cost. The expenses will be included in the capital expenditure of the project. The same may be followed in future."