The ONGC board had referred the proposal to the corporation's project development committee for working out the feasibility of participation in the project, petroleum ministry sources said.

ONGC had made the proposal in line with its plans to diversify into the power sector, they said, adding that it was planning to supply gas to the Kawas power plant from its oil fields in Gujarat.

However, the petroleum ministry has asked the corporation to concentrate on its core operations of exploration rather than venture into new areas, sources said.

ONGC will have to invest upto Rs 8,000 crore for the rehabilitation of Bombay High. Another Rs 8,000 crore will be required for overseas operations, they said, adding that the corporation would not be able to spare any more money for the purpose of diversification.

Sources said that ONGC had already pulled out from the IOC's power projects, including the Svali power project in Gujarat. Meanwhile, NTPC sources said that no formal proposal from ONGC had come through with regard to the 660 mw phase-II gas based power project.

Sources said that the commissioning of the Kawas power project could be delayed as the corporation has not been able to invite tenders for equipment supply contracts due to a Cabinet delay in settling the price preference issue.

The petroleum ministry had said that the ONGC is looking for oil equity abroad and therefore the company would have to require additional financial muscle in these ventures.

Diversification in the areas of power, petrochemcials and refining would not be able to help ONGC maximise its potential, sources said, adding that the exploration company was also unlikely to pick up equity in IOC's Paradip refinery project in Orissa.

ONGC has appointed Geffi and Cline as project consultants to work out the rehabilitation plan for the Bombay high oil fields and initial estimates indicate that the corporation will have to spend upto Rs 8,000 crore for increasing production in these wells, they said.