New Delhi: ONGC Videsh Ltd (OVL), the overseas arm of state-run explorer Oil and Natural Gas Corp.(ONGC), has signed an agreement to expand its oil and gas exploration in offshore Vietnam.

The Indian flagship firm will consider exploring in 2-3 blocks out of the 5 areas in South China Sea that Vietnam had offered on nomination basis in November last year.

The five blocks or areas -17, 41, 43, 10&11-1 and 102&106/10, offered in November last year lie outside the territory claimed by China in the South China Sea.

“OVL and PetroVietnam, the major oil producing state-owned company of Vietnam, signed a Letter of Intent (LoI) on 15 September to participate in the exploration of oil and gas in offshore Vietnam," the company said in a statement.

The LoI was signed by OVL managing director Narendra K. Verma and PetroVietnam president and CEO Do Van Hau in Hanoi during the state visit of President Pranab Mukherjee to Vietnam.

Oil minister Dharmendra Pradhan was also present at the signing. “The LoI provides for expansion of exploration activities by OVL in Vietnam by considering participation in 2-3 additional blocks subject to technical and commercial viability and requisite approvals," it said.

In turn, PetroVietnam may consider participation in some of the exploration blocks of OVL on mutually agreeable terms subject to due-diligence.

OVL forayed into Vietnam as early as 1988, when it bagged the exploration license for Block 06.1.

The company got two exploration blocks - Block 127 and Block 128, in 2006. However, Block 127 was relinquished after completing the work programme, and the other Block 128 is currently under exploration.

Additionally, ONGC Videsh and PetroVietnam have been engaged in further discussions for possible expansion of cooperation in hydrocarbon sector of Vietnam, the statement said.

OVL had relinquished Block 127 in offshore Phu Khanh Basin after it failed to find any oil or gas in the area.

Though it had decided to withdraw from adjacent Block 128, it has decided to stay put because of India’s strategic interests in the region. The exploration period for the block has been extended until 15 June, 2015. China claims sovereignty over most of the South China Sea where Block 127 and 128 are located and had warned the Indian arm from drilling in the region. OVL continues to own 45% 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.

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