ONGC Videsh to pump $500 mn in Colombia

ONGC Videsh, the overseas arm of the state- owned Oil and Natural Gas Corporation (ONGC), will pump a further

$500 million into the Colombian oil fields it acquired jointly with Sinopec last week. OVL and Sinopec acquired Omimex de Colombia, for $850 million. Omimex has since been rechristened Mansarovar Colombia in which both Sinopec and OVL have 50 per cent stake.

OVL sources said the company plans to ramp up production at the Colombian oil fields from the current 20,000 barrels per day (bpd) to 80,000 bpd over the next 12 months. Omimex has onshore production as well as exploration blocks in Colombia with the known reserves of 157 million barrels.

Sources said the company would use the revenue generated from the oil fields to ramp up production with no fresh Indian investment from India slotted for the project. At the time of acquisition, OVL had said that production could be ramped up to 1,00,000 barrels per day, half of which would be OVL's share. OVL had calculated at the time of concluding the deal that the revenues from the oil fields would amount to $1 billion.

Sources indicated that the current drop in crude oil prices would not affect the price of the Colombian crude as it is a heavier crude than the WTI benchmark (West Texas Intermediate - a sweet crude whose price is used as a benchmark). "Our calculations are based on a crude price of $ 55-56 per barrel," the sources said. Omimex, which is registered in Delaware, entered Colombia in 1994 with the acquisition of Texaco's 100 per cent interest in the Velasquez fee mineral property.

Subsequently, it bought the remainder of Texaco's Colombian assets, including 50 per cent interest, in the nearby Nare and Cocorna Association Contracts.