ONGC bids for Lanka blocks

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  • Published 2.12.13

New Delhi, Dec. 1: ONGC Videsh Ltd (OVL), the overseas arm of state-owned Oil and Natural Gas Corporation, has bid for three blocks in Sri Lanka that are of immense economic and strategic interests to India.

Of the 13 blocks on offer, OVL has bid for three blocks — M4, M5 and M6 — in the Mannar basin, sources said.

Several global oil majors, including Exxon Mobil Corp, Royal Dutch Shell, France’s Total, Eni of Italy, and Sinopec and CNPC of China, have expressed interest in the blocks, with some likely to have placed bids.

The bidding in the second licensing round for oil and gas blocks in Sri Lanka closed last week.

The blocks will be awarded in the first quarter of 2014.

“It is important that OVL and other Indian oil companies take active interest in the hydrocarbon sector of Sri Lanka, keeping in mind the strategic importance and location of the island nation,” a senior oil ministry official said.

The state-owned firm placed its bids as part of a consortium after getting a go-ahead from the Indian government, which is keen on enhancing the presence of its own firms in Sri Lanka to counter the growing influence of China.

China has emerged as the largest development aid provider to Sri Lanka, having given $1.05 billion to the country in 2012, while India stood a distant second with aid worth $700 million, according to a report by Sri Lanka’s ministry of finance and planning.

Besides, Beijing is helping Sri Lanka to develop several infrastructure projects. Analysts said the growing influence of China in the island nation was being considered by New Delhi as a threat to its economic and strategic interests.

Cairn India already has a block in the Mannar basin where it has made two gas discoveries. It had won the block in Sri Lanka’s first licensing round in 2007 by defeating OVL and Niko Resources of Canada.

Besides the 13 shallow water blocks, Sri Lanka has also offered six ultra-deepwater blocks off India’s south-eastern coast for a joint study of their hydrocarbon potential.

The blocks on offer in the Cauvery basin range in size from 2,403 sq km in the shallow waters off the Palk Strait to 4,566 sq km in the deep water areas.

The blocks in the Mannar basin are larger, ranging from 2,714 sq km to 8,120 sq km in the deep to very deep waters of the Gulf of Mannar.

Although there have been no oil or gas discoveries in the Sri Lankan sector of the Cauvery basin, the Indian sector has significant oil and gas fields.