ONGC Videsh Ltd (OVL), the overseas investment arm of India’s largest oil producer Oil and Natural Gas Corporation (ONGC), is planning to bid for a "few" of the 19 exploration blocks being offered under two bidding rounds by Iraq, which has the world’s third largest oil reserves.
Iraq opened the second round of bidding on December 31, 2008 under which it is offering 11 oil and gas exploration blocks for to global oil companies. It had put on auction eight oil and gas fields in the middle of last year. Oil prices have tumbled over 70 per cent since Iraq had announced the first round of auctions.
OVL, along with 35 global oil companies, is the only Indian company to been qualified by the Iraqi government for bidding in its auctions.
"The Iraq government started selling the data related to all these fields in December. We have bought the data and will soon decide which blocks we bid for," said an OVL official.
The oil and gas fields are distributed around Iraq. They include blocks that lie along Iraq’s border with Iran and Kuwait.
Iraq’s oil minister Hussain al-Shahristani announced the second round of auctions in a press conference in Baghdad on December 31, 2008.
The same 35 foreign companies, including global majors such as ExxonMobil, Royal Dutch Shell, British Petroleum, Chevron Corporation and Chinese company Sinopec, that qualified to take part in the first round are involved in this one, The New York Times quoted Iraq’s deputy oil minister Ahmed al-Shammar as saying.
Iraq hopes to sign the contracts for the latest round of auctions by the end of 2009. The results for the first round are scheduled to be announced in May 2009.
"We have time till May this year to put in our bids," the OVL official said.
State-owned OVL has the mandate to buy oil and gas assets overseas as part of the Indian government’s plans to attain energy security. The company currently has 39 oil and gas properties in 17 countries. It had just one property in Vietnam seven years ago.
Earlier this week, OVL also announced that it would buy UK-based Imperial Energy for $1.9 billion after 96.8 per cent of the UK company’s shareholders tendered their shares to the Indian company. This is OVL’s largest-ever acquisition.
Iraq has roughly 115 billion barrels of proven oil reserves, making its the third largest in the world. However, a large part of this is now being produced after former Iraq leader Saddam Hussein cancelled all oil contracts around a decade ago.
The West Asian country is now looking to restart it oil fields and generate more revenues in order to rebuild its war-ravaged infrastructure.
Associated Press quoted al-Shahristani as saying that only 15 of 78 known oil and gas fields have been brought into production, and many desert areas in western and southern Iraq have yet to be explored.
Iraq is offering the oil fields on long-term contracts. The companies would be paid a flat fee for their services instead of production-sharing contracts through which the companies and the government share the oil and its profits.
