 "OVL gets 1-year extension for exploring Vietnamese oil block")
ONGC Videsh Ltd, the overseas arm of Oil and Natural Gas Corp (ONGC), has received one-year extension to explore a Vietnamese oil block in the contested waters of the South China Sea.
This is the fourth extension for OVL to explore Block-128, the license for which is now valid till June 15, 2017, sources privy to the development said.
OVL had in May applied to the Vietnamese authorities for a fourth extension of the exploration licence for the deepsea block to maintain India's strategic interest in the South China Sea.
Vietnam's national oil company PetroVietnam has granted the extension, sources said.
OVL had signed Production Sharing Contract (PSC) for the 7,058 square km Block 128 in offshore PhuKhanh Basin, Vietnam on May 24, 2006. Ministry of Planning & Investment (MPI), Vietnam issued investment licence for the block on June 16, 2006, being effective date of the PSC.
The company has not found any hydrocarbon in the block but is continuing to stay invested.
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OVL first took a two-year extension of the exploration period till June 2014 and then another one year. A third extension was granted on May 28, 2015 and now a fourth extension has been granted. The company has so far invested $50.88 million in the block.
The block lies in the part of South China Sea over which China claims sovereignty. In 2011, Beijing had warned OVL that its exploration activities off the Vietnam coast were illegal and violated China's sovereignty, but the company continued exploring for oil and gas.
OVL forayed into Vietnam as early as 1988, when it bagged the exploration licence for Block 6.1.
The company got two exploration blocks - Block 127 and Block 128 - in 2006. However, Block 127 was relinquished due to poor prospectives, the other Block was retained.
The first extension followed China putting the area under Block 128 for global bidding.
China claims sovereignty over most of the South China Sea where the two Blocks are located and had warned the Indian arm from drilling in the region.
OVL continues to own 45 per cent stake in Vietnam's offshore Block 6.1 and its share of production was 2.023 billion cubic metres of gas and 0.036 million tonnes of condensate.
The company in October 2014 signed an agreement to pick up to 50 per cent stake in the two exploration blocks in the South China Sea.
OVL took 40 per cent stake in Block 102/10 and 50 per cent in 106/10 that lie outside the sea territory claimed by China. In return, PetroVietnam took half of OVL's 100 per cent stake in Block 128.
