The Oil and Natural Gas Corporation has doubled the crude oil production at Imperial Energy, the Russia-focused oil firm it acquired recently, to 16,000 barrels per day and is set to turn the company around next year.
When ONGC Videsh Ltd, the overseas arm of the state-run firm, took over Imperial in January 2009, it was producing less than 6,000 bpd of oil from fields in the Western Siberia region of Russia.
"In less than a year, production has increased to 16,000 bpd," a source in the know of the development said.
The company is targeting an output of 25,000 bpd in 2010 which would help Imperial post maiden cash profits.
Imperial had in calendar year 2007 posted cash losses of $40 million which in 2008 rose to $100 million. This is likely to be cut to $15-20 million in 2009, and 2010 may see cash profits, the source said.
An small OVL team, headed by Ashok Verma, a seasoned executive who in his previous stint handled Assam oilfields of ONGC, is braving minus 40 degrees Celsius temperature to operate the fields that are located in isolated swamps and deep forests that have no rail or road links.
The source said when Oil Minister Murli Deora visited Tomsk in September, OVL had set itself the difficult task of producing 16,000 bpd by the year-end and it achieved the target this week.
"When OVL took over Imperial in January 2009, oil output had fallen to below 6,000 barrels per day. It was able to restore it to about 8,200 bpd by May and ramped it up to 11,200 bpd in September (when Deora visited the fields)," the source said.
It is targeting an output of 25,000 bpd by end of 2010.
He said though production has not matched the previously set targets by the British owners of Imperial, reserves in the fields have gone up to 946 million barrels from 920 million barrels when OVL had bid for the company in August 2008.
Imperial assets hold a large potential upside for OVL, which the company plans to tap going forward.
OVL, which acquired the London-listed Imperial Energy for $2.1 billion, had initially planned an investment of an additional $1.5 billion to raise the output to 35,000 bpd by the end of 2010 but has deferred it for doing more analytical studies about the field reservoir.
It invested $209.6 million in developing the fields in 2009 and an additional $46.39 million on exploration.
Imperial had projected crude output to rise to 25,000 bpd (1.25 million tonnes a year) by the end of 2008 but the actual production was hovering around 7,000 bpd when it accepted OVL bid last year and later the output fell below 6,000 bpd at the time of handing over the company. The output was to increase to 35,000 bpd (1.75 million tons) by the end of 2009.