New Delhi, Oct. 6: State-owned firms ONGC and OIL are planning to collaborate with private energy firms such as Reliance and Essar to bid for a prolific oil and gas block in Abu Dhabi.
A 75-year oil concession granted by Abu Dhabi to foreign partners in onshore areas is about to expire beginning of next year.
Adco, an affiliate of state operator Abu Dhabi National Oil Company, one of the oldest oil companies in the region, is currently working on the block with a consortium that includes BP, Total, ExxonMobil, Royal Dutch Shell and Portugal’s Partex.
The contract is set to expire, and the Abu Dhabi government has started the process of inviting fresh bids to partner Abu Dhabi Company for Onshore Oil Operation (Adco) in exploring the block. Bids will be received this month. A large number of international companies are interested in the block because of its high reserves.
The Indian firms are studying hydrocarbon data, possible consortium structure to compete with global players and the amount of stake to bid for.
“It is an immense opportunity for the exploration firms in the country to bid for blocks in such a proven hydrocarbon zone,” industry sources said.
Sources said the process had just started and it was too early to finalise the Indian consortium partners, though a partnership among PSUs and private players was an option. However, the consortium is likely to bid for a minority stake only.
According to analysts, joint bidding by state-owned firms will provide the financial muscle. However, the consortium must also include global firms to induct new technology in exploration.
The oil and gas blocks on offer provide an immense opportunity for the Indian firms to buy stake in a region which is a major source of crude for the country.
Adco plans to increase its crude output to 1.8 million barrels per day (bpd) by 2017 from 1.6 million bpd. The largest oil producing company in the UAE controls 98 billion barrels of proven oil deposits.
The consortium is likely to face competition from existing global players, who are keen to bid for the renewal of the concession. New players from Asia are also likely to bid.
The exploration firms from the country will have to compete with China National Petroleum Corporation (CNPC), the Korea National Oil Corporation, Japan’s Inpex and Russia’s Rosneft.
The oil ministry is likely to encourage state-owned firms to bid aggressively as part of New Delhi’s energy security strategy.
Oil ministry sources indicated that the Abu Dhabi government could favourably look at the bids by the Indian consortium considering the friendly ties between the two countries.
The Abu Dhabi asset can provide an impetus to Indian companies in their hunt for quality assets in regions close to the country. It is also likely to energise ONGC Videsh Ltd (OVL), which had failed to secure a stake in the prolific Kashgan oilfiield in Kazakhstan recently.
“One failure does not mean we stop operations in the country completely,” OVL managing director D.K. Sarraf recently told reporters here.
The government has eased the investment norms for state-owned firms to fast track overseas acquisitions.Maharatna firms such as ONGC can independently take decisions on investments up to Rs 5,000 crore, which will reduce the time period to make bids.