ONGC pursues Sudan expansion

By Khozem Merchant in Mumbai, Financial Times

ONGC Videsh, the overseas arm of India’s Oil and Natural Gas Corporation, is negotiating to buy stakes in two more oil concessions in Sudan, where it has invested $750m in the past 15 months.

The Indian company is also at an advanced stage of talks with Sudan’s government to build a 750km pipeline from Khartoum to Port Sudan on the Red Sea in a deal worth $250m.

Atul Chandra, managing director, said ONGC was in discussions to buy a small stake in an acreage being developed by a consortium led by China National Petroleum Corporation and Malaysia’s state-owned Petronas.

Separately, ONGC was also in talks to acquire blocks independently in south or north Sudan.

Mr Chandra said the exploration deals could be concluded within two months and, along with the pipeline, would raise the company’s investment in the African country to beyond $1bn, as well as strengthening a growing relationship with its Chinese and Malaysian partners.

This month, ONGC agreed to pay Austrian oil company OMV $115m for its stake in blocks in Sudan in which Petronas was a co-developer. In June last year, ONGC paid $642m to Talisman Energy of Canada for its 25 per cent stake in the Greater Nile Oil Project, in which Petronas and CNPC hold a 30 per cent and 40 per cent share respectively.

Sudan has emerged as a third major front after Vietnam and Russia for the state-owned ONGC Videsh. The company is under pressure to step up exploration overseas as India looks to secure its oil security. India imports two-thirds of its oil requirements.

ONGC, which is also exploring in Libya, Syria and holds disputed acreage in Iraq, says the increased investments in Sudan was part of a wider plan to raise its oil reserves from 6bn tonnes to 12bn tonnes over the next two decades.

“North Africa is a major focus for us,” Mr Chandra said.