OVL returns in Sudan to exceed estimates

The revenue accruals to ONGC Videsh Ltd (OVL) from its investment in the Greater Nile Oil Project (GNOP) of Sudan during the current financial year are expected to exceed the original estimates by 23 per cent.

OVL has informed the Empowered Committee of Secretaries that during 2003-04, the project is expected to generate revenue accruals of about $288 million as against the original estimates of $234 million.

This will be the first full year of the operation of the project after OVL had picked up a 25 per cent stake in it.

OVL has also told the committee that the project is performing better than expected and till the end of October 2003, revenue accruals were around $170 million.

OVL holds a 25 per cent stake in GNOP via its wholly owned subsidiary ONGC Nile Ganga BV registered at Amsterdam. This stake was acquired by buying 100 per cent stake in Talisman Greater Nile BV and converting it into ONGC Nile Ganga BV.

After accounting for all the revenues and the expenses incurred on the project, OVL had paid $669.1 million for taking the 25 per cent stake in the project.

The encouraging results from GNOP have prompted OVL to consider taking the maximum possible stake in `Project Alpha', an exploration block in Sudan.

The project consists of three blocks where major oil discoveries have already been made. OVL is proposing an investment of around $360 million in this project.

In addition, OVL also proposes to invest around $850 million in pipeline and refinery projects of Sudan. Therefore, if all the projects in Sudan come through, OVL's total investment commitments in Sudan will be around $2,041 million.

OVL has informed the committee that these figures may go up substantially in case significant upsides arise in GNOP and discoveries are made in the exploration blocks in Sudan.

"In that eventuality, further investments would be required for development of the discoveries in order to bring them into production," it has said.