Marathon leads race to buy Enron’s stake in Panna-Mukta, Tapti projects

New Delhi, April 16: US energy giant Marathon Oil has emerged favourites in the race for Enron Corporation’s 30 per cent stake in Panna-Mukta and Tapti oil and gas-fields, after bids of five others including Oil and Natural Gas Corporation (ONGC) and Reliance were found “unacceptable.”

While, Enron is learnt to have zeroed in on Marathon after rejecting bids of ONGC, Reliance, Hindustan Petroleum Corporation (HPCL), Indian Oil Corporation (IOC) and Unocal of the US, it has also approached the government to resolve glitches in the joint venture, before selling its stake, sources said.

Enron has been forced to resolve pending joint venture issues with partners ONGC and Reliance, as they proved deterrent in fetching the “right” price, sources said adding Enron officials have had one round of “unsuccessful” dialogue with Petroleum Minister Ram Naik and Petroleum Secretary P Shankar to seek their intervention in the issue.

When contacted, Marathon Oil officials confirmed bidding for Enron’s stake in the $900 million venture and said “we haven’t yet received any communication of acceptance of our bid.”

Marathon Oil is learnt to have quoted $300-350 million for Enron’s stake after discounting the cost of resolving the glitches in the agreement, sources said.

Enron officials are tightlipped about the whole process saying “it is not the company’s policy to comment on divestiture proceedings.”

Enron met Mr Naik late last month, to seek his intervention to resolve the pending issue, which he is learnt to have declined, sources said.

While Enron is believed to have pegged the sale price of its stake in the venture at $700 million, independent evaluations by various domestic and international companies have estimated the price between $250 to 380 million, factoring several pending agreements and unresolved issues, sources said.

ONGC holds 40 per cent stake in the venture, while the remaining 30 per cent is with Reliance.

The unresolved issues include gas transportation cost from Tapti and delivery point for Panna, which has resulted in a 10 per cent revenue loss, which the government deducts from the total gas revenue of the company.

There are also differences among the three promoters about the prospects and exact reserves in place in Panna-Mukta and Tapti oil and gas-fields, sources said.

There is also a major controversy over the costs of the projects. The joint venture is working in excess of the limits of the costs specified in the agreement, though no approval has been given for the increase, sources said.

While, Enron already has arbitration against ONGC and Reliance for not paying the expenses incurred by them, the partners are of the view that EOGIL, the operator of the project, is not operating the fields in a cost-effective manner. (PTI)