Government owned ONGC has been looking for foreign partners for development of its gas field in the KG basin as it has little experience in deep sea explorations and could leverage the expertise of foreign partners. It is planning to invest $7.7 billion for the development of the KG block which is next to RIL's KG-D6 block. The KG Basin has seen many gas discoveries including India's largest gas discovery in recent years by RIL in 2002.
Exxon Mobil and British oil major BP were also in the race last year to acquire the stake while companies like Petrobras and Norway's Statoil also showed interest in the stake at one point of time but later exited. While BP acquired a 30percent stake in RIL'S 23 oil and gas blocks for $ 7.2 billion in February 2011, Exxon is no longer interested in the stake. Foreign companies are uneasy about investing in India's oil and gas sector on the back of red tapism and bureaucratic hurdles that cost project delays. ONGC's demand of royalty payments from Cairn India has delayed the sale of Cairn India which is a subsidiary of Cairn Energy to London based Vedanta resources.
ONGC is expecting to produce a total of 87 billion cubic meters of gas from the KG block .The company expects to begin production from the block four years after it gets the permission of the government for drilling eight more wells.