OVL evaluating oil and gas bids

OVL evaluating oil and gas bids

Hyderabad: ONGC Videsh Ltd (OVL), the overseas subsidiary of India’s biggest oil explorer, Oil and Natural Gas Corp. Ltd (ONGC), plans to bid for oil and gas blocks in Myanmar, Iraq and Vietnam to secure fuel supplies for the world’s second fastest growing major economy.

India has stepped up its engagement with Myanmar and Vietnam, even as growing demand for energy in two of the world’s fastest growing major economies has pitted the country against China in a race to acquire assets across the world. Vietnam President Truong Tan Sang and Myanmar’s first civilian president, Thein Sein, visited New Delhi last week. India’s growing proximity to Vietnam hasn’t gone down well with China; in late September, China’s People’s Daily, the mouthpiece of the country’s ruling Communist Party, criticized a project between India and Vietnam to prospect for oil and gas in a region west of the disputed Spratly Islands, according to a Reuters report.

OVL is also interested in bidding for hydrocarbon blocks in Gabon. While an ONGC executive, who did not want to be identified, confirmed OVL’s Gabon plans, Sarraf said, “When Gabon announces its rounds, we will be there."

Gabon is expected to announce the auction in January, said Desire Koumba, the country’s ambassador to India.

“We plan to announce 42 blocks for bidding. ONGC has evinced interest in bidding in our next round," Koumba said.

OVL and Oil India Ltd are intensifying their search for energy assets overseas because the country depends on imports to meet 80% of its oil needs and is particularly vulnerable to price volatility in crude oil. India accounts for around 3.5% of the global consumption of crude oil and is the world’s fifth largest energy consumer.

Local power consumption is likely to double by 2030 to the equivalent of 833 million tonnes (mt) of oil, according to an International Energy Agency forecast.

So far, the total investment made by Indian state-controlled companies such as OVL, Oil India, Indian Oil Corp. Ltd, GAIL (India) Ltd, Hindustan Petroleum Corp. Ltd and Bharat PetroResources Ltd to buy overseas assets for exploration and production is 64,832.35 crore.

A successful bid by OVL will help the firm offset declining production in properties in Sudan, Sakhalin and Syria.

OVL, which is the only state-run unit to have producing assets overseas, produced 9.44 mt of oil and gas in the year ended 31 March and has a target of 6.5 mt of oil and 2.25 billion cu. m of gas for the current year.

Ignoring Chinese objections to India-Vietnam energy cooperation in the disputed South China Sea, India and Vietnam last week signed an accord to expand their partnership in oil and gas exploration, refining, transportation and supply.

India also announced a new line of credit of $500 million (Rs 2,445 crore) to promote economic and development activity in Myanmar last week as it agreed to encourage investments from Indian firms in the energy sector.

OVL already has a presence in Vietnam and Myanmar. It has a 45% and 100% stake in blocks 06.1 and 128, respectively, in Vietnam. Even as India tried to get gas from Myanmar blocks, in which OVL and GAIL together hold a 30% stake, the Myanmar government decided to sell the gas to China, after which OVL and GAIL took a 8.35% and 4.17% stake, respectively, in the pipeline being constructed by China National Petroleum Corp. to transport gas from the offshore blocks A-1 and A-3 to China.

OVL has a 17% stake each in blocks A-1 and A-3, and the Shwe offshore mid-stream project in Myanmar.