ONGC Videsh, which last month picked up 15% stake in Rosneft’s Vankor oil field in East Siberia for $1.25 billion, is considering bidding for six blocks on offer in Uganda. The development comes at a time when PM Narendra Modi is targeting to expand economic ties with energy-rich African nations. India is expecting to host heads of more than 50 African states in New Delhi during the India-Africa summit during October 26-29.
“OVL is studying the data of the blocks (in Uganda). We would decide on the number of blocks to bid for,” a senior official privy to the development told FE. The blocks on offer are Ngaji,Taitai, Karuka, Ngassa, Mvule and Kanywantaba, covering about 2,983 sq km together. Successful bidders for these blocks would be announced by January 15, 2016.
The official said discoveries have already been made in Uganda and exploration activities are being carried out. This indicates less of hurdles to start working in the country.
The recent OVL-Rosneft deal, according to industry watchers, was helped by PM Narendra Modi’s discussions with Russian president Vladimir Putin in New Delhi in December last year and in Ufa in July this year, where India sought enhancing cooperation in oil and gas sector between the countries.
With India’s appetite to acquire energy assets overseas increasing, a similar strategy opted by China since the past many years, it is likely to get a diplomatic push.
OVL would have to compete with at least 15 global explorers from Canada, Norway, Australia, UAE and Nigeria, among others.
The bidding is taking place at a time when crude oil prices have touched six-year low. Global oil and gas giants such as Shell, Total and BP, according to reports, have cut capital spending by at nearly $14 billion this year in response to lower crude oil price.
Recently held auctions by Mexico came as a surprise with just two firms bagging blocks in the maiden round.
In the first tender only two firms — Mexico’s Sierra Oil & Gas in a consortium with Houston-based Talos Energy and UK’s Premier Oil — bagged blocks, which offered to pay
the government 55.99% of the operating profit from a first block and 68.99% from a second, in both cases offering to invest 10% above the minimum requirement.
In FY15, OVL production went up by 6% to 8.87 million tonne of oil equivalent (mtoe) against 8.36 mtoe in FY14. In the current fiscal, it targets to cross 9 mtoe output. 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.