ONGC Videsh (OVL) expects its associated petroleum gas plant coming up at its loss-making fields acquired from Imperial Energy in Russia’s Tomsk region to become operational by December 2018.
ONGC Videsh (OVL) expects its associated petroleum gas plant coming up at its loss-making fields acquired from Imperial Energy in Russia’s Tomsk region to become operational by December 2018. The overseas arm of state-owned oil explorer, ONGC, also plans further field development in Vietnam. “The associated petroleum gas plant will be ready by December next year. Once a technology is approved, it will be good for the future of assets in the area,” said an OVL executive requesting not to be named. As reported by FE in June 2017, OVL is in the process of creating a facility at the site which will enable the use of associated gas produced from the field to enhance crude oil production and also produce value-added products. Associated gas is a type of natural gas found mixed with crude oil reserves or floating above crude oil reservoirs. Usually, this gas is flared or burnt. However, as per local laws — since it affects the environment — authorities have a penal provision. Instead, OVL plans to utilise the gas to augment production which is fledgling.
In 2009, OVL acquired the assets of the UK-listed Imperial Energy for a consideration of $2.1 billion and has invested additional $300 million for development.
Crude oil production from the assets, however, has been disappointing at 7,000 barrels per day (bpd) compared with the initial estimates of around 80,000 bpd.
OVL on various occasions has sought tax concessions from the Russian government, but its requests have been turned down given that similar tax structure was applicable to all producers in the region. “It is a challenging field. There is no development in tax issue with Russia but the policy is such that we will get some returns,” said the executive.
Later, the Comptroller and Auditor General (CAG) in a report observed, “The technical consultant while confirming the audit observation opined that it is a known fact that tight reservoir had poor productivity and also poorer recovery in comparison to a normal one. The prediction for production levels was highly optimistic rather than realistic. Therefore, the company should have been more cautious when the seller had indicated a very rosy picture, especially when Russian ministry had expressed doubts about the reserves quoted by the seller.”
Another company executive said the company is going to make further development in Vietnam’s 6.1 block — exploration licence for which was bagged in 1988 — which at present produces around 13-14 mmscmd of gas per day and OVL holds 45% stake in the block. “The field is actually declining and the investment is aimed to arrest the decline. It will start in the third quarter of calendar year 2018,” the executive added.
Production from the block has remained constant, though the capacity is higher. The whole offtake from the field is done by the Vietnamese government and it depends upon the demand as it goes to domestic power stations. “If it’s a good monsoon they take less, if it’s bad they take higher amount,” said the executive.
Earlier this year, OVL also got extension for two years to explore a Vietnamese oil block in the South China Sea. During a press meet on Wednesday, OVL managing director NK Verma said the firm is also close to making new acquisitions and an announcement will be made shortly.