OVL barters stake in oil blocks with Sudan
By Business Standard
NEW DELHI, Jan 19, 2004 — ONGC Videsh (OVL), the overseas arm of Oil and Natural Gas Corp, will give Sudan 5% of its stake in two prized oil blocks for free, as a quid pro quo for Khartom accommodating it in another producing oil field.
Sudan had asked ONGC Videsh to part with 5% of its stake in block 5A and block 5B, which it had bought from Austrian company OMV AG for $136 million, in return for Sudan facilitating OVL’s buyout of Talisman Energy of Canada in Greater Nile oil project.
Atul Chandra, OVL managing director, received a letter from Sudapet, Sunanese national oil company stating, “The Sudan government forced OVL in block 1/2/4 against the will of a partner in the block. In addition, the government is willing to sign a deal with OVL to build a product pipeline and upgrade Port Sudan refinery. In the light of foregoing, we request OVL give us 5% stake free of charge in blocks 5A and 5B.”
Sources in OVL said the Sudan government has informed that it is a policy to ask for carried share for Sudapet to build and upgrade it to a real national oil company.
“OVL will give 2.5% stake each in blocks 5A and 5B to Sudapet for free,” they said adding after the farm-out, the return on investment from block 5A would be in the range of 11.52-16.15% while from block 5B it would be between 12.41-17.06%.
The rate of return has been calculated based on a oil price of $19-22 a barrel, they added.