ONGC wins joint bid to develop crude oil blocks in Venezuela

ONGC wins joint bid to develop crude oil blocks in Venezuela

Mumbai / New Delhi: Agroup of companies that includes the overseas arm of Oil and Natural Gas Corp. Ltd (ONGC) has won a joint bid to develop two crude oil blocks in Venezuela’s Orinoco petroleum belt.

The global consortium includes ONGC Videsh Ltd (OVL), Indian Oil Corp. Ltd (IOC), Oil India Ltd (OIL), Spain’s Repsol YPF and Malaysia’s Petroliam Nasional Bhd (Petronas).

OVL, Respol and Petronas will each hold a 11% share in the joint venture, and IOC and OIL will have a 3.5% stake each, ONGC, India’s biggest oil explorer, said in a statement on Thursday.

The remaining 60% stake will be owned by Corporación Venezolana del Petróleo, a unit of state-owned Petróleos de Venezuela SA (PDV).

“This is a major opportunity as well as a challenge for us to work in the heavy oil belt area of Carabobo," ONGC chairman and managing director R.S. Sharma said.

The consortium will develop the multi-billion integrated oil project in the Carabobo 1 Norte and Carabobo 1 Centro blocks in the Orinoco region.

The group may pay $1.5 billion as a signing amount and also extend $1.05 billion credit to PDV, PTI news agency reported. It would have a license to develop the blocks for 25 years, which can be extended by another 15 years.

Mint had reported on 6 April 2009 about OVL’s plans to jointly bid for oil exploration and production blocks in Venezuela.

Deutsche Bank AG was the arranger of the deal for the Indian firms. The contract is likely to be signed next month.

“This deal has been in the works for the last 6-9 months. It is an attractive place for heavy oil discoveries," said Amrit Singh, head of mergers and acquisitions at Deutsche Bank India. “The project cost will be higher at $15-20 billion because heavy oil exploration requires high investment."

Surabhi Sharma, an analyst with local brokerage firm SMC, said that the deal would not make a significant impact on ONGC’s revenue but has the potential to increase the firms’s borrowings.

The blocks are likely to produce 400,000 barrels per day of heavy crude, half of which will be upgraded to light crude.

Shares of ONGC rose 1.14% on the Bombay Stock Exchange to close at Rs1,100.20 on Thursday. The exchange’s benchmark Sensex index rose 1.45% to close at 16,152.59 points.

PTI contributed to this story.