The ministry of petroleum and natural gas has asked the external affairs ministry to intervene and carry out 'diplomatic initiatives at high level' with China, Malaysia and Sudan for smooth acquisition of Talisman Energy's stake in Greater Nile Oil Project (GNOP) by ONGC Videsh.
The petroleum ministry fears that the property sale to ONGC Videsh Ltd (OVL) may be blocked by existing stakeholders of the oil project.
ONGC Videsh is all set to buy the 25 per cent stake from Talisman Energy Inc of Canada in the Sudan project for $750 million.
The other equity stakeholders of GNOP are, China National Petroleum Corporation with 40 per cent; Petronas Carigali Overseas SDN BHD (Petronas) with 30 per cent; and Sudanese National Oil Company, Sudapet Ltd, with 5 per cent.
As per the existing exploration-and-production-sharing agreement between the consortium members and the government of the Republic of Sudan, there is a proviso of right of pre-emption, which authorises each partner to take over the stake in the project which is made available for sale by any partner by matching the offered price and terms.
"Considering that the National Oil Company of China and also Malaysia are partners in GNOP, and are aggressively looking for equity oil supplies from overseas, a serious possibility exists that the right of pre-emption in respect of the sale of this property by Talisman to ONGC Videsh may be invoked," wrote Ram Naik, minister of petroleum and natural gas, to the external affairs minister in a letter dated June 21, 2002.
The overseas equity is important as it will save almost $ 400 million every year, an amount equivalent to 5 per cent of India's crude-oil requirement.
The current production at GNOP is around 250,000 barrels per day, approximately equivalent to the India's largest oil and gas reservoir, Bombay High. The property in Sudan is expected to bring oil security to the extent of about 3 million tonne per annum to the country.
Industry sources say that the government is likely to take a decision soon as the new Union finance minister, Jaswant Singh, perceives energy as an area of national security.
Considering the proposed investment to pick up 25 per cent stake from Talisman Energy, ONGC Videsh has targetted a 14 per cent (nominal) rate of return in dollar terms, even though it has incorporated sufficient discount factor.
As on December 2001, the GNOP has nine fields with 101 wells on production, with wells from Munga field scheduled to commence production this month.
The GNOP has already commenced oil production from 1999. The average production for 2001 stood at 219,000 barrels per day, and during the first week of January 2001, the average production was 233,000 barrels per day. The fields produce crude oil with only 0.5 per cent of sulphur content.
