India to resume operations at stalled hydrocarbon block in Iraq



The Centre is looking at resuming operations of state-run ONGC Videsh Ltd’s (OVL) hydrocarbon exploration block in Iraq, which has been under force majeure since 2003.

NEW DELHI : At a time when Iraq has emerged as a major supplier of crude oil to India, the Centre is looking at resuming operations of state-run ONGC Videsh Ltd’s (OVL) hydrocarbon exploration block in Iraq, which has been under force majeure since 2003, said two people with knowledge of the development.

One of the persons said Indian energy companies may look at investing in oil and gas assets in the West Asian country.

“Several aspects would be considered for resumption of operations at the stalled project and investments, including the security situation. There are some issues on which clarity would be required," said this person.

‘Block 20’, earlier known as Block 8, is a large on-land exploration block in the Western Desert of Iraq, spread over 10,500 sq km. OVL had acquired 100% stake in the block by signing the exploration and development contract in November 2000, However, force majeure was declared in 2003 amid security concerns.

Force majeure is removes liability for unforeseeable and unavoidable catastrophes that prevent participants from fulfilling contractual obligations.

Both the subjects of investments and resumption of operations at the stalled projects were discussed during an India-Iraq Joint Commission Meeting (JCM) last month.

The JCM was held during the visit of Hayan Abdul Ghani Abdul Zahra Al Sawad, Iraq’s deputy prime minister for energy affairs and oil minister. A petroleum ministry statement had said that during the meeting, union minister for petroleum and natural gas Hardeep Singh Puri highlighted the natural and traditional synergies between the two countries on account of India’s position as a growing energy demand centre of the world.

He called for strengthening relations between the two sides, including in oil and gas, capacity-building and diversification of the trade basket. The JCM was held after a gap of 10 years.

He also underlined the readiness of Indian companies to explore investment opportunities in Iraq, the upgradation of infrastructure facilities of the oil and gas sector and their amenability for sourcing increased quantities of crude oil from Iraq based on appropriate pricing regime.

The Iraqi minister expressed his government’s desire to welcome Indian companies to invest in Iraq, including in rehabilitation projects.

On 12 June, Mint reported that India is planning to build a liquefied natural gas (LNG) terminal in Iraq. The terminal will liquify some portion of the gas currently flared by Iraq and transport it to India, where it will be converted back to LNG for use in city gas distribution as well as power, fertilizer, and steel sectors.

In FY23, Iraq was the second largest exporter of crude oil to India, with total supplies of 50.31 million tonnes for $33.37 billion. It was the topmost supplier in value terms.

Queries sent to the ministry petroleum and natural gas, embassy of Iraq in Delhi and ONGC Videsh Ltd remained unanswered.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.