BackONGC Videsh wants to swap South China Sea block with another in Vietnam
The development comes in the backdrop of New Delhi setting in motion a process to improve ties with ChinaONGC Videsh had agreed to continue exploring the hydrocarbon block after China had put it up for global bidding
PremiumNew Delhi: In what may weaken Vietnam’s case in its dispute with China over the South China Sea, India’s ONGC Videsh Ltd (OVL) wants to exit hydrocarbon block No.128 and swap its stake with another block in the South-East Asian nation.
China and Vietnam are among several countries having competing claims over the South China Sea and islands in the region. Tensions have flared in the past between the two nations over the Spratly and Paracel Islands. Also, China, which disputes Vietnam’s sovereignty over the waters in the South China Sea, had earlier objected to the presence of an Indian vessel surveying the area.
“OVL doesn’t want to drill there given the risks involved. It has requested to swap the block with some other block," said one person aware of the development, requesting anonymity.
ONGC Videsh is the overseas arm of state-owned explorer Oil and Natural Gas Corp. Ltd (ONGC) and has a presence in Vietnam through 45% and 100% stakes in blocks 06.1 and 128, respectively.
OVL had earlier agreed to continue exploring the South China Sea hydrocarbon block No. 128 , after China had put it up for global bidding. Its fifth extension ends in June.
The development comes in the backdrop of New Delhi setting in motion a process to improve ties with China. The 73-day tense military stand-off between Indian and Chinese troops at the Doklam plateau in Bhutan in 2017 was a low point in bilateral relations between Beijing and New Delhi.
Since then, leaders of both countries have had several meetings at the highest level to normalize ties. OVL is also requesting Vietnam’s national oil company PetroVietnam to waive off the $15 million fine for not completing the committed work programme, given that it has spent more in the block than its work commitment. OVL has invested around $56 million in block 128.
“The discussions are on. OVL can fulfil that commitment by drilling in some other block," the person added. OVL has invested $28 billion in 41 projects across 20 countries. It has probable reserves of 711.36 million tonnes of oil equivalent, with its experiences being a mixed bag.
It suffered reverses in its $2.1 billion acquisition of Imperial Energy Corp. Plc’s deposits in Siberia. It also awaits half-a-billion dollars in dividends overdue from the San Cristobal oil exploration project in Venezuela, and is fighting an arbitration case with the Sudanese government to recover around $400 million in unpaid oil dues.
“They (Vietnam) want OVL to be there. That’s the reason why they have been giving extensions to OVL. OVL has a commitment of drilling a well and has already undertaken other expenses such as surveys," said a second person, also requesting anonymity. Chinese president Xi Jinping is expected to visit India this year.
With escalation of hostilities between India and Pakistan, China—an all-weather ally of Pakistan—is expected to play a key role. “There have been instances in other countries wherein the committed work programme gets shifted to another block. Whoever is the operator will have a similar wish list. OVL has been talking for some time. Let’s see what happens," the second person added.
Queries sent to spokespersons of OVL, PetroVietnam, the embassies of China and Vietnam in New Delhi and India’s ministries of petroleum and external affairs on 20 February remained unanswered.
India has been seeking Chinese support in its efforts to ensure Jaish-e-Mohammed chief Maulana Masood Azhar is proscribed by the United Nations following the recent attack on a convoy of Central Reserve Police Force personnel in Kashmir.
The UN Security Council has condemned the suicide attack in a statement that also named Jaish. While China earlier tried to stall the statement for its reference to JeM, it finally went ahead with it.
“There is no hydrocarbon found in that block. We have been present there because the Vietnamese government had asked us to be there," said an Indian government official, requesting anonymity.
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