ONGC Videsh to buy into Angola block for $600 mn

In its largest acquisition, ONGC Videsh Ltd, the wholly owned subsidiary of ONGC, today signed an agreement to acquire a deepwater offshore oil field in Angola for $600 million. The oil field will start gushing oil by 2007 and is expected to achieve a peak production of more than 2,00,000 barrels of oil per day.

ONGC in a press release said: "An agreement has been reached between ONGC Videsh Ltd and Shell Development Angola BV for ONGC Videsh Ltd's acquisition of Shell's entire 50 per cent interest in the deep-water offshore Block 18 in Angola, including the Greater Plutonio development."

Atul Chandra, managing director of ONGC Videsh Ltd, told Business Standard: "It is the largest investment of the company. We are looking at oil equity abroad and will achieve 20 million tonnes of overseas oil equity by 2010."

The recent acquisition will result in ONGC acquiring at least 5 million tonnes of oil from the Angola field.

ONGC Videsh Ltd has several projects across different parts of the globe. It bought its first equity oil in Sudan in May 2003, a 25 per cent equity in the Greater Nile Oil Project, from Talisman BV, Amsterdam. In Russia, it has stakes in one of the largest oil and gas fields in offshore Sakhalin.

ONGC Videsh produces gas from two offshore fields in Vietnam. In Iraq, OVL is the sole licencee in an onland exploration block while it has a 40 per cent stake as operator in an exploration and development contract for an exploration block in Iran. Besides, in Myanmar, the company has a 20 per cent stake in an offshore exploration block.

Chandra pointed out that by 2007, OVL will have an oil equity abroad of at least 15 million tonnes.

ONGC's Angola acquisition is expected to be complete later this year " subject to approvals from Angola government and Sonangol, and pre-emption rights of BP and Sonangol. The consideration for the transaction will be around $ 600 million, assuming completion in middle of 2004", the release added.

The Greater Plutonio project, involving the development of six fields in water-depths ranging between 1,200 to 1,500 metres, will be the first development in Angola's Block 18.

The project is operated by BP, and will consist of a single spread-moored floating, production, storage, and offloading (FPSO) vessel linked by risers to a network of sub-sea flow-lines, manifolds and wells. BP recently received authorisation from Sonangol to proceed with the awarding of major contracts.