OVL abandoned blocks in the nation in 2014
Sanction-free Cuba is looking to strengthen energy ties with India and cooperation in the oil & gas sector is on cards when its first vice-president, Miguel Diaz-Canel, visits New Delhi starting next week, sources told FE.
In 2014, government-owned explorer ONGC Videsh relinquished stake in two hydrocarbon blocks in Cuba. “OVL surrendered the blocks because the country was under sanctions and prospects were not looking great. Currently, we have not started re-looking at options,” a senior OVL official told FE.
In September 2006, OVL had signed a production-sharing contract for 100% interest in deepwater blocks N-34 and N-35. It had invested about $47 million to find hydrocarbon there. The blocks, located in Cuba’s Exclusive Economic Zone (EEZ), cover an area of 4,300 sq km.
In addition, the PSU explorer held a 30% stake in blocks N-34 and N-35. Spain’s Repsol YPF held 40%, while Norway’s Statoil Oil and Gas had 30% interest. The acquisition of prolific assets overseas that are in production state or expected to commence shortly are of utmost priority, as petroleum minister Dharmendra Pradhan looks to cut down India’s ballooning crude oil import bill (which rocketed from $112.1 billion in FY11 to $155.7 billion in FY14).
Last December, US President Barack Obama announced plans to re-establish diplomatic ties with Havana, and economic ties that were broken 54 years ago are expected to follow. While American businesses are keen on access to a Cuban market cut off by the economic embargo, Cubans, too, are looking to opening up the country for more investment in various sectors, especially energy.
The waters off the island’s northern coast are believed to have hydrocarbon reserves. But international oil companies have been reluctant to explore there for fear of angering the Americans. Spanish oil company Repsol drilled off shore in 2012, but did not find oil and, eventually, gave up. Studies have indicated that promising drilling locations remain and companies are keen on exploring now.
In FY14, OVL has seen its output go up 15.15% at 8.36 million tonne of oil equivalent. The incremental production has come from assets in Azerbaijan, Brazil and Venezuela. Currently, OVL has 32 projects across 16 countries. Of this, 11 are producing while another five acreages are discovered assets and under development. The remaining 14 projects are in various stages of production.