With domestic oil and coal production stagnant, India has intensified its quest for energy resources overseas, a trend that would further buttress outward FDI flows and strain its capital account. While India?s coal imports are set to rise steeply, a consortium of state-owned firms led by ONGC Videsh (OVL) ? the overseas arm of ONGC ? on Wednesday reiterated its commitment to increase investments in a couple of heavy oil projects in Venezuela from $350 million to $3 billion.
The Latin American nation holds the largest reserves of light and heavy crude oil in the western hemisphere.
Minister of state for commerce Jyotiraditya Scindia said in Venezuela that this would be one of the biggest overseas investments for India?s state-owned firms and help them get access to energy assets in Venezuela.
As per the plan, OVL will invest an additional $2.2 billion in the Carabobo-1 heavy oil project, where parent ONGC already holds an 11% stake, while IOC and Oil India hold 3.5% stakes each. This oilfield is expected to produce 400,000 barrels a day of heavy oil.
In parallel, OVL would also invest $500 million in the San Cristobal oilfield, where it holds a 40% stake through a $350-million earlier investment.
OVL has already developed an creditable asset base that comprises producing, discovered and exploration fields across the continents. It has operator status in eight projects and joint-operator status in another seven. OVL produces hydrocarbons from 10 assets, namely Sakhalin-I (where it invested $2.7 billion) and Imperial in Russia, Al-Furat Project in Syria, apart from the fields in Vietnam, Colombia, Sudan and Brazil. There are five more projects where oil has been discovered and 14 in the exploration phase.
Apart from the flagship explorer, other Indian public sector units like GAIL and BPCL are also keen on exploring opportunities in Venezuela for marketing and enhancing trade between the countries. Engineers India (EIL), another PSU, has also expressed interest in providing design and engineering services in the hydrocarbon sector. Scindia mentioned that Indian public sector oil companies want to enter into agreements on a spot basis.
During the bilateral meetings, Indian also forwarded a proposal to Venezuela for its participation in a refinery joint venture project with the Indian Oil Corporation in Orissa. The two countries are also looking at building shipping lines between India and Venezuela and are finalising a double taxation avoidance agreement (DTAA).
Some of the other issues that were brought to the attention of the minister were the nationalisation of oil rigs, foreign exchange regulation restriction and policy of state to decide the rent.
Off shore
* OVL has invested $350m in the San Cristobal oilfield and intends to invest an additional $500m
* OVL, partners propose to invest $ 2.2 billion in the Carobobo project