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ONGC Videsh Ltd (OVL) and its partner Oil India Ltd (OIL) have signed contracts to explore for oil and gas in two areas in Bangladeshi waters.
An equal joint venture of OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), and OIL yesterday signed production sharing contracts (PSC) for shallow water blocks SS-04 and SS-09 in Bangladesh.
"OVL along with OIL formed a consortium (50:50) and participated in the Bangladesh Offshore Bidding Round 2012, launched by Bangladesh Government during December 2012," the company said in a statement.
The consortium was officially notified as the winner of two shallow water blocks SS-09 and SS-04 on August 20, 2013.
"Subsequently, the Production Sharing Contract (PSC) was discussed and initialled on September 19, 2013 and the Government of Bangladesh approved the award of the blocks to OVL/OIL consortium on December 3, 2013," the statement said.
Under the contract signed yesterday, OVL-OIL will spend $103.2 million during the initial exploration of the two blocks.
They will also carry out an in-depth seismological survey of the blocks during a five-year initial exploration period which will be followed by a three-year exploration period.
OVL-OIL combine will be allowed to operate and sell oil and gas for 20 years from an oil field and 25 years from a gas field.
Under Bangladeshi law, the two firms cannot sell gas outside the country and must first offer the fuel to national oil firm, Petrobangla. If Petrobangla does not accept the offer within six months, they can sell it to anyone within Bangladesh.
OVL, which had gone into a shell after its 2008 acquisition of Russia-focused Imperial Energy was criticised, has turned into an aggressive bidder on the international scene during the past year.
In October 2013, it won two onshore blocks - B2 (Zebyutaung-Nandaw) and EP-3 (Thegon-Shwegu), in Myanmar. These scalps came close on the heels of OVL exercising its pre-emption rights to snap 12% more stake in a Brazil's BC-10 oil block for $529.03 million.
With this OVL's stake in the block, where Royal Dutch Shell is the operator, has increased to 27%.
In Colombia, OVL teamed up with Sinopec of China to grab two oil and gas exploration blocks.
This followed, OVL and OIL buying a 10% stake of Videocon in a gas block in Mozambique for $2.48 billion.
OVL followed this by buying another 10% from Anadarko of US for $2.64 billion.
The Mozambique block is estimated to hold 35 to 65 trillion cubic feet of gas reserves, which can be shipped to energy hungry India.
