OVL looking to buy two Siberian blocks to boost asset base

THE overseas arm of ONGC, ONGC Videsh Limited (OVL) is looking to buy equity stakes in two blocks in East Siberia belonging to Russia’s Rosneft.

The sizes of the deals are expected to be worth of around $2 billion.

An announcement to this effect is likely when Russian President Vladimir Putin visits India in December, says a media report.

In one deal, OVL is looking at picking...

up a 10 percent stake in the Vankor fields that are producing crude oil. The feasibility studies are underway.

The field, which has been under production since August 2009, currently produces more than 400,000 barrels of oil per day, double the output of Barmer, India’s largest onshore field, which is operated by Cairn India.

The second deal OVL is discussing with Rosneft is to buy equity in a greenfield project, Yurubcheno-Takhomskoye. Here OVL is likely to buy 49 percent stake.

The two deals when effected will bolster the asset base of OVL, whose overseas forays are a key part of India’s energy security strategy.

OVL, India's most foreign company, with cumulative investments abroad up to March 31, 2014, of over $22 billion, has has stakes in 33 oil and gas projects in 16 countries.

OVL produced 8.36 million tonnes of oil and oil equivalent gas in 2013-14 as against 0.252 million tonnes annually a decade ago.

The area of the Vankor field is nearly 416.5 square kilometres. According to Rosneft, the initial recoverable reserves in the Vankor field are 500 million tonnes of oil and condensate, and 182 billion cubic metres of gas as of January 2014.

Oil and gas condensate production in 2013 was 21.4 million tonnes. Currently, daily production rate is nine percent more than at the same period in 2013, says the Rosneft website.

In July, Russian exploration giant Rosneft came under the umbrella of US sanctions imposed on the country for its actions in Ukraine. The energy firm has sought financial support to the tune of $40 billion to offset sanction-hit measures.

Rosneft is trying to sell stakes in its prolific assets to mop up funds.

Interestingly, Putin has also invited China to invest in the Vankor oil fields.

Recently, Putin was quoted as saying, “Overall, we take a cautious approach to letting in our foreign partners, but we of course set no restrictions for our Chinese friends.”

The Yurubcheno-Takhomskoye project has the potential to produce 1 billion barrels per annum after three years.

During the last two years, OVL has made new acquisitions to the tune of $4 billion including 2.72 percent in the Azeri, Chirag and the deep water portion of Guneshli fields in the Azerbaijan; 2.36 percent interest in the Baku-Tbilisi-Ceyhan pipeline; additional 12 percent in Block BC-10 at Campos Basin in Brazil; six percent stake in the Rovuma Area 1 offshore block in Mozambique from Videocon; and a direct 10 percent stake in the same Rovuma Area 1 from Anadarko.