New Delhi, Dec. 26: ONGC’s overseas arm is believed to be in talks once again with Reliance Industries Ltd and Sonatrach of Argentina for joining hands to develop the Tuba oilfield in Iraq.
ONGC-Videsh (OVL), in partnership with Reliance Industries and Sonatrach, had earlier completed negotiations with the Iraqi government for a stake in the Tuba oilfield in southern Iraq. But before the deal could be signed, the Gulf war broke out, terminating all deals entered into by the Saddam regime.
Though a Reliance spokesperson declined to comment, sources said Reliance and ONGC Videsh were in talks. The consortium will see ONGC Videsh and RIL holding about 30 per cent stake each and Sonatrach the remaining 40 per cent. This will give the Indian companies the controlling stake jointly.
Petroleum minister Murli Deora is believed to have taken up this case with Iraqi oil minister Hussain Al-Shahristani earlier this year. Officials said this is different from several contracts that were in nascent stages and were later cancelled. Moreover, the size of the field is relatively small and is unlikely to interest big western companies.
The ministry of external affairs has supported the move to defend Indian interests in Iraq. The petroleum ministry had set up a special cell on Iraq-related issues headed by a joint secretary. This cell was looking into cases such as Tuba.
While the main contracts for the reconstruction of Iraq will remain in the hands of US companies such as Bechtel, Indian firms are vying for sub-contracts. Engineers India Ltd, Indian Oil, GAIL and ONGC will be looking for such sub-contracts in the oil sector. This opportunity would cover oilfields, downstream refinery ventures and pipelines that form part of essential infrastructure. Indian companies will also be looking for contracts in the power, telecom and transport sectors. Their prior experience in Iraq is expected to prove useful for the execution at the ground level.
Indian oil firms are under a mandate to seek oil equity abroad as the country is heavily dependent on imports and there are limited possibilities of shoring up domestic finds. The search for oil from overseas fields has become urgent with oil prices rising over the last year. Fears of instability in West Asia have risen once again because Iran has said it will defy UN sanctions and continue with nuclear research.
ONGC has picked up a 28 per cent participation stake in another oil exploration block in Libya. Global giant Exxon-Mobil and Impex Holdings of Japan have also farmed out two blocks. The three blocks, which formed part of the latest round of auction, attracted only single bids.
A senior ONGC official said this would be the fourth exploration block that the company has picked up in Libya. Indian Oil Corporation and Oil India Ltd combine also has a block in the onshore Sirte basin in Libya where they have completed their seismic surveys and will start exploratory drilling.