ONGC lines up $350 m for overseas drill

Fresh target

New Delhi, April 17: ONGC-Videsh Ltd has committed an expenditure of over $350 million to explore overseas oil blocks that it recently acquired in Sudan, Ivory Coast, Egypt, Qatar, Libya and Australia. Senior officials say this is the ?minimum committed expenditure? and investment will be stepped up if there is a major oil or gas find.

The highest expenditure of $269 million has been earmarked for block 5A in Sudan, in which OVL has a 24 per cent stake. The block is being operated by Malaysian oil giant Petronas, which has a 68.9 per cent share.

Similarly, OVL will invest $26 million in block 5B in Sudan, also operated by Petronas. While the Malaysian firm owns a 41 per cent share in it, OVL has 23.5 per cent.

OVL has a 100 per cent participating interest in the Najwat Najem oil structure in Qatar, in which it will invest $15.5 million. It also has an interest in a block in Libya, where the first two wells that were drilled have turned out to be dry and the company is gearing up for spudding another two.

This shows that oil exploration has an element of risk involved in it and having acquired a stake in an overseas exploration block may or may not lead to an oil find.

OVL had also acquired a stake in a gas block in the US offshore, which it had handed over to Oil India Ltd. But this venture had to be abandoned as the drilling did not yield any hydrocarbons.

OVL has committed an expenditure of $7.2 million as its 55 per cent share in Block WA in Australia, where Antrim Energy Inc is the operator with a 32.5 per cent share.

The Indian company will also invest $21.8 million in the Ivory Coast block, where OIL has a 11.5 per cent stake. The other major shareholders are Sinopec of China and Vanco, both with 30 per cent.

The government is planning to strengthen OVL by increasing its equity base. Following the success story of the Sakhalin and raising returns from the Greater Nile project in Sudan, ONGC-Videsh is no more a fledgling company.

The offshore Vietnam gas field and the large gas find in Myanmar, where ONGC and Gail have a 30 per cent stake, have put the OVL into the big league.