New Delhi, May 22: State-owned explorer ONGC Videsh Ltd (OVL) has submitted pre-qualification bids for 12 blocks in Iraq in line with the Centre’s strategy to strengthen the country’s energy security. The auction of the oil and gas blocks will take place early next year.

“We have submitted the pre-qualification bids to be considered for the fourth round of auction. The names of the successful firms will be announced in June and they will have to bid for the blocks in January,” company sources said. OVL is the overseas arm of ONGC.

“We will scout for joint venture partners after the pre-qualification round. We are quite optimistic of making to the next round as we have past experience in that country,” the sources said.

The blocks on offer are in the provinces of Babil, Basra, Dhi Qar, al Muthanna, Najaf, al Diwaniyah and Wasit in the south, Diyala and Nineveh in the north, and al Anbar in the west. The bidding will be for seven gas and five oil blocks.

This will be the fourth round of bidding for foreign companies; the earlier auctions were held in July and December 2009 and October last year.

At present, OVL is the sole licensee of Block 8, a large onland exploration region in the western desert of Iraq. It had secured the block in 2001. However, the terms of the contract are being renegotiated by the Iraqi government following changes in their oil and gas laws. Iraq has proven oil reserves of 143.1 billion barrels and gas reserves of 129 trillion cubic metres.

The bid to acquire Iraqi assets is part of the government’s plan to boost the country’s energy security as India imports 80 per cent of its crude oil and a substantial portion of its gas needs.

Deal spree

In April, OVL signed a deal with Kazakhstan’s national company Kazmunaigas to buy a 25 per cent stake in the Satpayev exploration block in the Caspian Sea. OVL plans to spend $400 million to develop the oil and gas asset.

The Satpayev exploration block, located in the highly prospective northern region of the Caspian Sea, is close to major discoveries. The block contains two prospective structures, namely Satpayev and Satpayev Vostochni (east) with 256 million tonnes in estimated hydrocarbon resources.

OVL also plans to barter its 100 per cent stake in Russian unit Imperial Energy for a 25-30 per cent interest in Sistema-owned Bashneft. The deal is likely to be worked out in the next six months. It had acquired Imperial Energy in 2008 for $2.1 billion.

Bashneft produces 13 million tonnes of oil in its Russian fields and owns refineries with a combined capacity of 20 million tonnes.

Besides, OVL will get part of Sistema’s 49 per cent stake in RussNef, whose fields in Russia produce 12 million tonnes of oil, and a stake in Trebs and Titov fields that Bashneft won recently.

Bashneft is developing the largest discovered fields in the Arctic circle — Trebs and Titov. The fields have an estimated 200 million tonnes of reserves.

ONGC has entered into an agreement with Uzbekneftgaz, the national oil company of Uzbekistan, for upstream exploration and production and exploring opportunities in a third country.

The Kazakhstan deal marked another success by ONGC in its attempts to buy assets overseas to secure energy supplies for the world’s fastest-growing major economy after China.

ONGC, which has been witnessing a decline in production at its ageing fields in India, had earlier missed out on several acquisition opportunities, especially to cash-rich Chinese companies, in Africa.

India’s energy plan sees the country’s dependence on imports to increase to 90 per cent by 2030. The government has been pushing state-run explorers to expedite acquisitions of overseas exploration and producing assets as a hedge against fluctuations in global crude oil prices and save on precious foreign exchange.