New Delhi, Aug. 22: Riding on the success of the Greater Nile project, ONGC-Videsh is set to acquire a stake in another oil property in Sudan for which the oil major is readying a war chest of around $ 100 million during the current fiscal.
Sources say the investment would cover both the acquisition of the 26 per cent stake of an Austrian company in the exploration Block 5A, and the expenditure required to develop the block in this financial year.
It is learnt that the government has given the go-ahead for the deal and ONGC-Videsh is expected to move swiftly to clinch it.
The modus operandi for negotiating the deal will be on the lines of the Greater Nile project in Sudan and the Sakhalin I acquisition in Russia to give ONGC-Videsh the leverage to make quick on-the-spot decisions.
This approach has been adopted to avoid bureaucratic red-tape. The deal will be financed from ONGC’s funds.
Block 5 A is considered a good prospect as it is adjacent to the rich Greater Nile oilfield and oil has already been struck in the first well. The block extends over an area of around 21,000 square kms. Currently, Malaysian national oil company Petronas, Lundin Oil of Switzerland, and Sudapet of Sudan have equity stakes in it.
The Sudan government is reported to be satisfied with the performance of ONGC-Videsh and has even offered it projects to expand the oil refinery and lay a pipeline there. The company’s foray has brought more business for the country and trade with Sudan is also expected to pick up as a result.
ONGC-Videsh’s stake in the Greater Nile oilfield assures it three million tonnes of crude per annum. This has enhanced the country oil security by another 5 per cent, and works out to a million barrels every month.
ONGC-Videsh recently sold its share of one million barrels of crude from the Sudan oilfield to China, for which it will be raking in a neat $ 26-27 million. Earlier, two months’ cargoes were supplied to the ailing Mangalore Refineries and Petrochemicals Ltd (MRPL), in which ONGC has a 51 per cent stake.
Sources disclose that ONGC-Videsh is banking on crude sales from the Sudan oilfield to make its net profit soar to Rs 500 crore-Rs 1,000 crore in 2003-04. This wide range factors in the huge fluctuations in international crude prices. If the target is achieved, the fledgling firm will make a sudden leap into the big league as the net profit clocked in the last fiscal was only Rs 59 crore.