This year’s capex programme of state-run ONGC Videsh would be higher than last year’s by a third.
“In 2015-16, our capex plan is around R10,000 crore, higher from last year’s about R7,500 crore,” SP Garg, OVL director (finance) told FE. The explorer targets to touch an output of 9 million tonnes of oil equivalent (mtoe) this fiscal against 8.78 mtoe in FY15.
The higher output is expected from its projects Sakhalin-1 in Russia, Carabobo-1 in Venezuela, Azerbaijan, and the ones in Brazil, while it would be a full year of production from its Myanmar asset, Garg added.
Of the total capex programme in the current fiscal, about R7,300 crore has been earmarked for the projects already under production, while R1,200 crore would go towards exploration fields. OVL has stakes in 33 oil and gas projects in 16 countries. Of this, 13 are producing; four are under development; 14 are in the exploration phase; and two are pipeline projects. The government explorer has so far invested more than $23.6 billion in hydrocarbon assets overseas.
The capex would be met from the internal accruals, Garg said, adding that currently the explorer has debt of around $5 billion at “competitive rates”, which is not to increase unless OVL goes for new buys. With the recent drop in global crude oil prices, not many companies are willing to sell equity in assets, fearing lower valuation.
OVL had registered the highest ever production of 9.45 mtoe in 2010-11. However, output fell after socio-economic unrest hit production in countries such as Sudan and Syria. The explorer’s assets in South Sudan that used to produce about 45,000 barrels per day are not in full operation, while its fields in Syria, where output could have been nearly 70,000-80,000 barrels per day are completely shut because of geopolitical turmoil.
In addition, one of its expensive acquisitions — of Imperial Energy, worth $2.1 billion in 2009 — turned out to be the worst buy in recent times after output fell drastically to less than 7,000 barrels per day now against forecast of 80,000 barrels per day.
Garg said OVL is trying to revive production from Imperial Energy. It is at present undertaking fracking to determine hydrocarbon presence in tight rock formations. The results would come in the next two to three months.
In the last two and half years or so, OVL has made new acquisitions to the tune of $4 billion including 2.72% in the Azeri, Chirag and the deep-water portion of Guneshli Fields in Azerbaijan; a 2.36% interest in the Baku-Tbilisi-Ceyhan pipeline; an additional 12% in Block BC-10 at Campos Basin in Brazil; a 6% stake in the Rovuma Area 1 offshore block in Mozambique from Videocon; and a direct 10% stake in the same Rovuma Area 1 from Anadarko.