ONGC Videsh, the overseas arm of Oil and Natural Gas Corporation (ONGC), will get 15 per cent less crude oil from the Sakhalin I oil field in Russia from next year as the reserves in the field depletes.
OVL, which has a 20 per cent stake in the oil field in Russia’s far east, currently gets around 38,000 barrels of oil per day from the Sakhalin I field which produces 190,000 barrels per day. OVL’s share is expected to fall to 32,000 barrels per day even as overall production from the field will dip to 160,000 barrels per day from next year.
“"The field is witnessing a drop in production since last year, due to declining reserves,” said a senior OVL official, who did not want to be named citing company policy. The official did not disclose the financial impact due to this
OVL, a 100 per cent subsidiary of India’s biggest oil producer, paid $ 1.7 billion for its 20 per cent stake in Sakhalin I, which reached a peak production (the highest rate of output) of 250,000 barrel per day in February 2007.
OVL, which has 38 oil and gas assets in 18 countries, currently produces around 176,000 barrels per day from its assets. OVL’s parent ONGC produces around 600,000 barrels per day of crude oil from its oil fields in India.
The Sakhalin I consortium – Exxon with 30 per cent stake, Russian company Rosneft with 20 per cent, OVL 20 per cent and Japanese company Sakhalin Oil and Gas Development Company Ltd with 30 per cent stake – plans to enhance production from the field by 2010 after implementing various higher recovery methods.
OVL does not bring its share of oil its overseas assets to India. It instead brings the money it gets from selling the oil in global markets and uses that money to buy more oil assets. It had however brought one cargo of Sakhalin I oil to its subsidiary Mangalore Refinery and Petrochemical Ltd’s refinery in Mangalore in early 2007.
Meanwhile, OVL is also keen on bidding in the auction of oil blocks in Angola and Colombia which are likely to take place later this year. The company is also one of the 35 companies short-listed by the Iraqi government for developing around 10 blocks there in which oil and gas have already been discovered.
“The Iraq government is holding a roadshow in London next month and we plan to participate,” the OVL official said. Iraq has the world’s third largest proven oil reserves, production of most of which was stopped after the Saddam Hussein government took over a decade ago. Iraq is now opening up the oil fields to overseas companies in a bid to restart production.
The company has also relinquished the Najwat Najem oil block in Qatar after it found that the oil reserves in the block were too small and it was not commercially viable to produce it. OVL had started testing the commerciality of the block in March 2005.
