The Telegraph
Saturday , February 8 , 2014
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Russian assets on OVL menu

New Delhi, Feb. 7: Russia’s Rosneft has offered ONGC Videsh Ltd a stake in 10 oil and gas blocks in Barents Sea and Black Sea.

“Rosneft, the Russian exploration and production company, has offered nine exploration offshore blocks in Barents Sea and one in Black Sea to OVL,” minister of state for petroleum and natural gas Panabaka Lakshmi informed the Lok Sabha.

“At present, OVL is studying the preliminary data provided by Rosneft to identify the preferred blocks for participation with Rosneft,” said Lakshmi without giving the details of the blocks on offer

Oil minister M. Veerappa Moily had earlier said that Rosneft had offered OVL a stake in the Magadan 2 and Magadan 3 exploration blocks in the northern part of the Sea of Okhotsk in eastern Russia.

The blocks are situated in the Okhotsk sea to the east of Siberia, bounded by Japan’s Hokkaido islands.

A couple of years back, Rosneft had got licences to explore five areas in the Okhotsk sea — Magadan 1, 2 and 3, Lisyansky and Kashevarovsky.

The area is estimated to hold 2.8 billion tonnes of oil and oil equivalent natural gas.

OVL has a 20 per cent stake in the Sakhalin 1 oil and gas field in the Russian Pacific ocean and bought Imperial Energy, which has fields in Siberia, in January 2009 for $2.1 billion.

Meanwhile, a parliamentary committee has sought a review of OVL’s $2.1-billion acquisition of Russia-focused Imperial Energy after production and oil reserves turned out to be way below projections made before the purchase.

The committee on public undertakings said OVL suffered a huge loss of Rs 1,182.14 crore during 2008-09 and 2009-10, whereas the cabinet committee on economic affairs had approved the buyout on the condition that it would yield at least a 10 per cent return on investment.

While seeking cabinet approval, OVL had projected that Imperial would produce 35,000 barrels of crude oil per day (bpd) in 2009, which will go up to 80,000 bpd by 2011.

The committee in its report before Parliament blamed the loss on unrealistic estimates of reserve production.

Since OVL did not farm out part of its stake to a local partner, the entire loss was borne by it, the report said.