FINANCIAL TIMES: ONGC to sign Russian pact: “Oil and Natural Gas Corporation, India's largest energy exploration company, will today sign a wide-ranging pact with Gazprom, the Russian oil and gas producer, allowing the two groups to bid jointly for global energy assets.”:  “ONGC has a one-fifth stake in the first stage of Sakhalin, where the Rosneft, the Russian state-owned oil company, and Exxon-Mobile are lead developers. The second stage has gone to Shell, the Anglo-Dutch group.” (ShellNews.net) 21 Feb 05

By Khozem Merchant in Mumbai

Published: February 21 2005

Oil and Natural Gas Corporation, India's largest energy exploration company, will today sign a wide-ranging pact with Gazprom, the Russian oil and gas producer, allowing the two groups to bid jointly for global energy assets.

The agreement is part of ONGC's strategy to strike global partnerships in a search for new sources of energy.

Seven in every 10 barrels of oil consumed in India are imported and, with ONGC's domestic fields past their prime and energy demand forecast to soar, the government is desperate to secure new fields abroad.

ONGC and Gazprom have identified several prospective assets in India, Russia and elsewhere.

A senior official at ONGC said "one possibility" could be a joint bid in the current round of India's exploration licensing policy, for which the deadline is May 31.

Gazprom already has a "strategic alliance" with Gas Authority of India but officials at the ministry of petroleum in New Delhi say parallel bids are unlikely.

A more likely option is a common bid to develop the next stage of Russia's remote Sakhalin gas fields off the country's Pacific coast.

ONGC has a one-fifth stake in the first stage of Sakhalin, where the Rosneft, the Russian state-owned oil company, and Exxon-Mobile are lead developers. The second stage has gone to Shell, the Anglo-Dutch group.

"Logically, Sakhalin 3 is where we can go in," said a senior ONGC official.

ONGC already has a pact with a Russian research body and works with Lukoil, another Russian oil producer.

But its memorandum of understanding with Gazprom, which paves the way for joint bids for energy assets anywhere in the world, could evolve into its closest partnership with a Russian entity.

India's energy companies face intense rivalry from their counterparts in China, whose fast-expanding economy requires new energy sources.