IOC, 2 others may pick pie in ONGC Sudan project

Indian Oil Corporation (IOC), Engineers India Ltd (EIL) and Oil India Ltd (OIL) are likely to pick up equity stake in Oil & Natural Gas Corporation (ONGC)'s Sudan pipeline project.

While ONGC Videsh Ltd (OVL), the wholly owned sbsidiary of ONGC, will hold a majority 50 per cent stake in the $240 million venture, 25 per cent will to be picked up by EIL, 15 per cent by IOC and 10 per cent by Oil India, sources in ONGC said.

ONGC chairman Subir Raha confirmed that talks were on with some of these companies. But declined to give details. The sources said the memorandum of understanding (MoU) between these public sector oil companies is being worked out, and is expected to be signed soon.

The 741-kilometre pipeline will be laid between Khartoum and Port Sudan, and the consortium partners can also use it to evacuate crude for supplies to India. Sources said the crude can be used by refineries in the country, and IOC's interest in the project comes from this.

Two shipments of sweet crude have come into the country to the standalone refinery of the ONGC-promoted Mangalore Refinery Pvt Ltd (MRPL). EIL will provide engineering and project management services, while procurement will be done from EIL's list of vendors. OIL will lend its expertise in building pipeline projects.

The pipeline will be handed over to the Sudanese government in the middle of 2005, and the government will maintain and operate it with the help of an expert committee from OVL and its partners.

The Sudanese government will repay OVL in 20 six-monthly instalments over 10 years. The ownership of the pipeline will be transferred to the government after the final instalment is paid, the sources added.

The mode of repayment has been a major bone of contention. OVL wanted repayment in Sudanese crude, while Sudan was insisting on cash payment with collateral in the form of Sudanese crude. Sudan was also willing to repay OVL only after the pipeline project was completed.