ONGC's proposal to assign a 25% participating interest in its Mahanadi basin deep water block, MN-DWN2002/2,to BG Exploration and Production India Ltd (BGEPIL) has been recommended for approval of the petroleum ministry by the Directorate General of Hydrocarbons(DGH). The proposed assignment of participating interest (PI) to BGEPIL is part of the strategic alliance initiative undertaken by ONGC to have internationally renowned companies as partners for exploration blocks in the country. Under this initiative,ONGC has already approached the government for assignment of similar interests in its other exploration blocks under Nelp to various other EP majors like ENIofItaly, Petrobras of Brazil and Statoil Hydro of Norway. While recommending the proposal for approval, the DGH told the petroleum ministry in a recent letter that BGEPIL possesses adequate technical capability for deepwater exploration. The DGH also noted that BG group was currently actively engaged in explo ration, production and transportation, trading of gas and oil in number of countries including Alaska, Algeria, Argentina, Brazil, Canada, China, Egypt, Kaza khastan, Norway, Nigeria, Oman, Phillipines,Thailand,theUSetc. Besides, the DGH said BGEPIL also had the sound financial backing of its parent company BG Energy Holdings, with a networth of over $110 billion. ONGC currently owns 100% interest in this block. After transferring its 25% stake to BGE PIL, which is the subsidiary of the $110 billion BG Energy Holdings, ONGC's stake will come down to 75% but it will continue to be the operator of theblock. Following the deal, the cost of exploration and production will be shared between ONGC and BG in the ratio of their participating interest. BG would also share the past exploration cost incurred by ONGC in proportion to its shareholding. The BG group has also signed another agreement with ONGC for taking another 30% in its KG basin block KG-DWN-98/4. The farm-in agreement for this block is again subject to a formal approval from the government. The Block KG-DWN-98/4 sits next to Reliance Industries' gas-rich KG-DWN98/3orKG-D6block. ONGC had won KG basin block KGDWN-98/4 in the first round of auction under Nelp while MN-DWN-2002/2 was awarded to it in Nelp-IV.