In the wake of the diplomatic bonhomie generated at the Indo-Russian Joint Commission, Russian national oil company, Roseneft, has also offered ONGC Videsh a participation interest in an onland oil block in the Astrakhan region. The Oil & Natural Gas Corporation (ONGC) subsidiary plans to rope in the Rs 59,000-crore Indian Oil Corporation for its adventurous foray into the oil-rich terrains of Central Asia. The ONGC Videsh and Indian Oil team may also venture into developing small oil pools in Texas. ONGC Videsh has been offered participation by an independent US operator, JK Andersen Inc, for developing small producing oil pools in Texas.

The domestic oil refining and marketing giant has a memorandum of understanding with ONGC Videsh for its diversification upstream. The association with Indian Oil will prove crucialnow that ONGC Videsh (armed with accumulated reserves of Rs 88.22 crore) is expected to spearhead the country's search for equity oil abroad. India is expected to import 65 per cent of its crude-oil needs by the turn of the century, from about 50 per cent now.

Policy-makers estimate that even if the country's refining capacity keeps pace with the jump in demand for petroleum products to 113 million tonnes by 2001 (from 85 million tonne at present), crude production will not.ONGC Videsh, which has got cabinet approval for a 40 per cent stake in 12 oilfields in the Russian republic of Udmort, has engaged investment bankers JP Morgan to raise more than a billion dollars of external commercial borrowings for its Russian ventures. The company will develop the Udmort oilfields jointly with Samson International of the US. The initial investment in exploration at the North Caspian Sea and at the Astrakhan region is estimated to be a meagre $73 million (about Rs 306 crore).

If ONGC Videsh strikes oil, its fundsrequirements will swell. Lukoil's condition for sharing the North Caspian oil reserves with ONGC is that the Indian company bear the exploration phase cost of about $70 million. Along with compensation for past cost and signature bonus, ONGC Videsh's financial commitment to the oil block will go up to $121 million. The expenditure involved in exploring the Astrakhan oil block is estimated to be $4 million, spread over three years. ONGC Videsh plans to participate in the venture with Roseneft with minimal risk and a walkout option. The Russian oil blocks give ONGC Videsh an exposure to rich hydrocarbon reserves. ONGC Videsh is keen on developing the small oil reserves in Texas, as the project will give its skilled technical staff exposure to tackling old, depleted and so, difficult oilfields. The national oil company plans to develop small oil pools by drilling four wells in West Texas for a start.

The risk capital involved in developing small producing oil pools will be about $400,000. If ONGC Videshstrikes oil, its investment in the Texas oil fields could go up to $1.25 million.

The national oil-exploration company is not daunted by the investments involved. The Planning Commission has allocated Rs 500 crore ($125 million) to ONGC for overseas oil exploration during the Ninth Plan period. Its overseas exploration arm, ONGC Videsh, has only spent $49 million, or a fifth of the plan allocation so far. The only constraint to the company's bold stride into distant lands is the absence of easy investment guidelines.Some sort of guidelines do exist for countries in which investment is permissible. In 1989, an empowered committee was set up to approve overseas oil-exploration projects in 11 specified countries, like Iraq, Iran, Malaysia, and Thailand.

Since then, the liberalisation bug has bitten many more nations, and erstwhile closed arenas, like Russia, have become investment havens for oil companies. In the absence of the ``Navratna'' empowerment committed to ONGC Videsh in July last year, the companywill have to await cabinet approval before exploring greener pastures.