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ONGC Videsh plans to invest $500 million to up output from Colombia

ONGC Videsh, the overseas arm of country’s flagship explorer ONGC, is mulling to spend nearly $500 million to increase crude oil output from the Mansarovar project in Colombia. However, this investment would be subject to extension of the Nare contract.

ONGC, oil prices
This month, OVL signed an initial agreement to raise its stake in Vankor to 26 per cent from 15 per cent, while three other state companies — Indian Oil Corp (IOC), Oil India Ltd (OIL) and Bharat Petroleum Corp Ltd (BPLC) would together pick up 23.9 per cent. (Reuters)
ONGC Videsh
In the current oil price scenario, Mansarover has turned its focus towards cost optimisation following the philosophy of volume with value and unlocking potential of those subsurface barrels that become economically viable with crude oil prices. (Reuters photo)

ONGC Videsh, the overseas arm of country’s flagship explorer ONGC, is mulling to spend nearly $500 million to increase crude oil output from the Mansarovar project in Colombia. However, this investment would be subject to extension of the Nare contract.

“From 2006 till 2015 year Mansarovar has invested around $1.5 billion. If the new strategic cooperation agreement of Nare Association is granted, the new investment would be close to $0.5 billion in the near future,” said Harvinderjit Singh, CEO of Mansarovar Energy Colombia, the joint venture between OVL and China’s Sinopec Petroleum International.

Mansarover has been the fifth largest oil producer in Colombia with production over 40,000 barrels of oil per day (bopd). In 2015, incremental average production in Nare Association if the new cooperation agreement is granted could be around 9,000 – 11,000 barrels per day through the implementation of new technologies, infill drilling and enhanced oil recovery (EOR) applications in Nare Fields.

During recent visit of Indian and Chinese diplomats to the field it was mentioned that Nare contract is expiring in November 2021 and any further major capex investment for increase in oil production from Nare fields would be related to the grant of extension beyond the expiry period.

The company is also producing from fully owned Velasquez field having medium API crude. The joint venture has other assets of drilling fleet and services, specifically the Velasquez-Galan pipeline.

“If the new cooperation agreement of Nare agreement is granted the company could add around 80 to 90 million barrels of prospective resources up 2040 in Nare Association. Also the new FDP of Velasquez field will add another important portion of reserves to the company,” Singh told FE.

In the current oil price scenario, Mansarover has turned its focus towards cost optimisation following the philosophy of volume with value and unlocking potential of those subsurface barrels that become economically viable with crude oil prices. More focus is being given on developing fully owned medium API Velasquez oil field having better revenue realisation where the company has recently gone for independent crude commercialisation with better returns.

Mansarovar Energy is a 50:50 joint venture company between ONGC Amazon Alaknanda from India and Sinopec Petroleum International from China. Over last ten years since inception in 2006 the company has positioned itself as a dominant player for heavy oil exploitation in Colombia using new technologies.

The heavy API crude oil exploitation is mainly from fields in Nare Association agreement having 50% share of Ecopetrol, the national oil company of Colombia. The company is also producing from fully owned Velasquez field having medium API crude. It has other assets of drilling fleet and services, specifically the Velasquez-Galan pipeline.

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