Rising hopes

New Delhi, Dec. 26: ONGC-Videsh Ltd and China National Petroleum Corporation have started pumping 67,446 million barrels of oil per day from their newly-acquired fields in Syria.

The two companies have formed a 50:50 joint venture to bid for the 36 per cent stake in PetroCanada’s Al Furat oil and gas fields in the Gulf country.

A senior OVL official said the two companies ? ONGC Videsh and China National Petroleum ? will jointly shell out $450-$480 million for the PetroCanada deal, which they have won. The Syrian oilfields are operated by Shell.

OVL and CNPC will pay around $225-$240 million each for 33,723 barrels of oil per day.

In the first half of 2005, these fields produced oil at an average rate of 187,350 barrels per day.

The remaining recoverable reserve potential of the asset is estimated to be more than 300 million barrels of oil.

These fields have been producing oil for more than 15 years. PetroCanada controls the production-sharing contracts (PSCs) of these fields through its subsidiaries. The acquisition will be completed after the government of Syria approves it.

Petro-Canada has sold its shares in four production-sharing contracts, including 33.33 per cent in the PSC of Ash Sham, 37.5 per cent in Dier EZ Zor (old), and 37.5 per cent in Dier EZ Annex IV.

Shell holds the remaining stake in the PSCs. A1-Furat Petroleum Co is the operator for the asset, whose shares are held by Shell (31.25 per cent), SPC (50 per cent) and Petro-Canada (18.75 per cent).

A senior OVL official said although the deal was closed on December 19, it will take retrospective effect from July 1 this year as that was the date fixed at the start of the deal.

It has taken around six months to work out the deal and the accruals since July will be adjusted against the final price.

OVL has entered the joint venture through its fully owned subsidiary, ONGC Nile Ganga BV, while CNPC has come via its subsidiary, Fulin Investments S.A.R.L.

The utilisation agreement of 36 per cent covers 36 producing fields in Syria. This agreement ensures that the oil output will not be reduced below the current levels.

An OVL official said this clause has been introduced as many cash-rich US companies buy oil assets and then cap the production.

OVL is already working on another exploration block in Syria, XXIV, in partnership with IPRMEL.

This acquisition will help the ONGC group expand its portfolio in Syria.