Oil India will hold a 20 per cent stake in this venture where the other partners are Total of France and the Oman Oil Company. The assignment involves work on an onshore exploration block next to a gasfield. Sources said Oil India stood a good chance of getting the contract though a lot would depend on timely government approval.

The names of the other contenders for this project are not known. The move is a clear indication that the top brass of Oil India are keen on giving a fillip to the corporation's activities overseas. "The idea is to restructure Oil India's focus on the lines of ONGC Videsh which has been successful in bagging good contracts overseas," sources said.

ONGC Videsh has begun focusing on regions like Kazakhstan where two discovered oilfields have been identified. The company has also been workingactively in Vietnam, Tunisia, Egypt and Yemen for upstream activities. Future efforts could involve roping in Indian Oil Corporation for overseas ventures.

The renewed focus on overseas activities could be attributed to the recommendations of the R-group report on restructuring the oil sector. The committee, headed by the former secretary in the ministry of petroleum and natural gas, Dr Vijay Kelkar, had suggested that efforts should be made to acquire acreage abroad and add to the country's equity in international reserves.

"India possesses the competence, manpower and service industry to explore, develop and access the reserves of oil and gas in international basins. NOCs (national oil companies) and Indian private companies must organise themselves to take advantage of India's strengths and to acquire equity in international oilfields," the R-group stated in its report. The committee acknowledged that both NOCs and the private sector would need substantial support from the government in terms of policyinitiatives for exports.

While opening Indian markets to the world, it may be necessary to link the same with exploration efforts in Iraq and the countries of the former Soviet Union. The R-group was of the view that the Central Asian countries, believed to contain about a fifth of the world's reserves, are potential areas.

To facilitate the process of working overseas on exploration efforts, the R-group recommended incentives in the form of tax reliefs/exemptions. Domestic exploration companies may also be allowed to invest abroad as an offset to the taxable income.

The committee said that to enable local companies to raise the capital required in foreign currency, domestic oil and gas production should be treated as deemed exports so that a part of the revenue can be considered to have been earned in foreign exchange. The foreign exchange so earned should be allowed to be retained by the Indian companies as a revolving fund for overseas ventures.

Insight -- a good move

The $10-millioncontract, if bagged by Oil India, would be extremely good for the company. Unlike in India, where there are no returns for a company till such time as it strikes oil, the $10-million contract would be like money in the bank regardless of whether Oil India strikes oil in exploration or not, as long as it completes the seismic study and undertakes drilling.

More importantly, the probability of striking oil in the Middle East is far greater than in India. The move by Oil India is also a clear indication of the company's intentions to improve overseas activities, which is where the lure of the lucre is. It is important that the company try to acquire extensive acreage abroad, which would undoubtedly help add to India's equity in international reserves.

However, a lot would depend on timely government approval - something for which the Indian bureaucracy is not known.