In a strategy to realign its assets by hiving off non-prolific ones, ONGC Videsh (OVL) is likely to give away two blocks — Block 128 in Vietnam and Area 43 in Libya. The relinquishment is likely to happen shortly and the reason cited is the areas are not economically viable, sources told FE.
In 2006, OVL, the overseas arm of India’s flagship oil and gas explorer ONGC, signed the production-sharing contract with Petro Vietnam for deepwater exploratory Block 128, with an area of 7,058 sq km in the offshore Phu Khanh Basin in Vietnam. OVL is the operator for the block with a 100% stake. The water depth ranges from 200-2,000 metres.
Sources said that one “commitment exploratory well” is to be drilled as a part of minimum work programme of the first phase of the exploration period. However, OVL is not keen to go ahead with the exploration, as the well drilled in the adjacent Block 127 turned out to be dry.
Meanwhile, Area 43 in Libya remained under force majeure during 2011-12 due to political instability. This lead to the expire of exploration period. Earlier, OVL had sought extension up to January 21, 2016, to review the prospectivity of the area. However, a source said the explorer had “made up its mind to relinquish the block”.
In April 2007, OVL entered into an exploration and production-sharing agreement (EPSA) with National Oil Corporation (NOC) of Libya contract Area 43. The block with an area of 7,449 sq km is in the offshore extension of the Darnah-Tobruq Basin.
When contacted, OVL managing director NK Verma refused to comment on the relinquishment.
In FY15, OVL’s production went up by 6% to 8.87 million tonnes of oil equivalent (mtoe) against 8.36 mtoe in FY14.
This fiscal, it targets to cross 9 mtoe output. The higher output is expected from its projects Sakhalin-1 in Russia and Carabobo-1 in Venezuela, apart from assets in Azerbaijan and Brazil, while it would be a full year of production from its Myanmar asset. In 2015-16, OVL has laid out a capex plan of around Rs 10,000 crore, higher from the previous year’s about Rs 7,500 crore. Of the capex programme in FY16, about Rs 7,300 crore has been marked for the projects already under production, while Rs 1,200 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 over $23.6 billion in hydrocarbon assets overseas.
Oil’s not eell:
* Likely to give away Block 128 in Vietnam and Area 43 in Libya
* Explorer says areas are not economically viable
* One ‘commitment exploratory well’ is to be drilled in Vietnam, but OVL is not keen
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