ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), is in talks to buy 25% stake in an exploration block off Falkland Islands in the South Atlantic sea.
OVL is in talks to buy 25% stake of UK-listed Falkland Oil and Gas Ltd in two exploration blocks, lying 350 miles off the Southern tip of Argentina, sources privy to the development said.
FOGL, an oil and gas exploration company focused on its extensive licence areas to the South and East of the Falkland Islands, will retain operatorship of the licence.
The blocks are located in the south and east Falkland basins in water depths ranging from 500 meter to 2,000 meter. The resources estimate of 15 prospects identified may hold up to 15 billion barrels of oil equivalent or 46 Trillion cubic feet of gas reserves.
As per the terms being discussed with FOGL, OVL would contribute its pro-rata share of 2012 drilling programme, comprising two exploration wells. OVL would also pay its pro-rata share of certain historical costs incurred during 2011 related to preparation for drilling this year. The costs incurred are estimated to be $68 million.
Besides, OVL would make a cash payment of $40 million.
If the Loligo prospect, where drilling is due this year, turns out to be a gas discovery, a liquefied natural gas (LNG) terminal would be built onshore with a capacity of about 7 million tons per annum for exports to consumption centres like India.
But if the reserves are of lesser than quantity, a floating LNG project may be developed, they said.
FOGL plans to drill one exploration well (Loligo) in Phase-1 in the Northern License Area. In Southern Licence Area it has committed to drill one well by December 30, 2015.
As per the licence terms, a Discovery Area can be held for five years to allow time for appraisal drilling and submission of a development plan, sources said adding exploitation (production) period has been capped at 35 years.
