ONGC Videsh reserves Rs 4500 cr for buyouts

ONGC Videsh Ltd, the overseas arm of state-run Oil and Natural Gas Corporation, is eyeing oil-and-gas properties in Brazil, Venezuela, Russia, Kazakhastan and west Africa. The company has earmarked around Rs 4,500 crore for acquisitions during the current financial year.

"For the last three years we have invested on an average $1 billion every year in acquisition of oil-and-gas fields abroad. We can sustain (this investment) for some time," said Subir Raha, chairman and managing director of ONGC, at a press conference.

ONGC Videsh's acquisitions is targeted at helping it raise its capacity. "Internally, we are targeting to reach 20 million tonne target by 2010 instead of 2020 and we need to fill up some gaps to achieve it," R S Butala, managing director of ONGC Videsh, said.

India, which imports 70 per cent of its crude oil requirement, has been encouraging oil companies to acquire oil equity abroad to attain oil security for the country. ONGC Videsh has now become India's largest foreign investor abroad.

Since 2000, ONGC Videsh has built a portfolio of global oil properties, which includes 20 per cent stake in Sakhalin and 25 per cent in Sudan's Greater Nile Oil Project.

It also acquired stakes in 5A and 5B exploration blocks in Sudan and a 50 per cent stake in a gigantic oil field in Angola.

"Last fiscal we invested about Rs 2,300 crore in acquiring oil properties and developing some of them. This year our investment may be Rs 7,500 crore," Butala said.

OVL, which got 3.323 million tonne of crude from Greater Nile, is likely to put the Angola field and block 5A in Sudan on production by 2006. And the Sakhalin-1 project was likely to go on stream by late 2005.

Butala said the A-1 gas field in offshore Myanmar, where a gas find with reserves of 5-8 trillion cubic feet was made earlier this year, is likely to go on production by 2008.

During 2003-04, the company's net take-out from Greater Nile, after paying royalties to the Sudanese government, was estimated at 1.2 million tonne with 0.9 million tonne of crude oil shipped to ONGC subsidiary, Mangalore Refinery and Petrochemicals Ltd, and the rest sold to Japanese and Chinese companies.

Realisation from the field was estimated at $26-29 a barrel. Butala said with rising prices crude oil globally, ONGC Videsh hoped to recover its investments in Greater Nile in a little over three years instead of the earlier six-year target.

"The crude oil from block 18, Angola, is sweet crude and I see no problems with Indian refineries accepting it. The Sakhalin crude may be sold in the spot market or brought to India," Raha said.

Butala said the Block-8 in Iraq holds good promise and can give India a steady stream of oil once the new administration in Baghdad approves the award of the block to ONGC Videsh. The block was awarded to the company during Saddam Hussein's regime.