Shirish Nadkarni
Published: Jun 26, 2007
India’s cabinet committee on economic affairs has approved a $380m investment plan by ONGC Videsh (OVL), the overseas investment arm of the state-owned Oil & Natural Gas Corp, to acquire 33% equity in an Egyptian deepwater block from operator Royal Dutch Shell.
The block is said to have estimated gas reserves of around 14trn cu ft, the size said to be approximately the same as that of Reliance Industries’ approved gas find in the Krishna-Godavari basin.
Shell’s high-prospect deepwater block is in the northeast Mediterranean region near Egypt.
Two of the six wells in the block have resulted in gas discoveries. Production is expected to begin by 2012.
Shell holds 84% of the block, with Petronas of Malaysia holding the remaining 16%.
OVL plans to convert gas into liquefied form and transport it to India.
This is the second overseas tie-up between ONGC and Shell, and its second asset in the region.
OVL had earlier acquired a 15% stakein Brazil’s BC-10 block after Shell exercised its pre-emption option to buy an additional 30% from Petrobras and transferred half in favour of the Indian company.
To secure energy supplies, India is seeking oil assets in countries such as Kazakhstan, Russia, Iran and Africa.
India is competing with China, since energy demand is growing in both countries as their economies expand, while output from aging domestic fields is stagnating.
The Indian government has set a target for OVL to produce 6.34m tonnes of oil and 1.65bn cu m of gas during the ongoing fiscal year ending March 2008.
OVL is also eyeing equity in the producing oil field of Kyurovdag in Azerbaijan.
According to a company official, if OVL bids and is successful, it would mark the company’s first foray into that country.
OVL is expected to bid over $300m to buy Caspian Energy Group’s stake in the oilfield.
CEG has 51% stake in Shirvan Oil Operating Company, which runs the Kyurovdag oilfield.
The State Oil Company of Azerbaijan Republic holds the remaining 49% stake.
Shirvan has been operating the Kyurovdag onshore oil field since June 1996.
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