ONGC explores oil in Sudan amidst risks

New Delhi, Feb 2, 2005 (NDTV) – India’s race for cheap energy has taken it to five continents and over a dozen countries.

Some like Sudan are perceived to be extremely risky due to high political tensions and even civil wars.

But at least in Sudan where ONGC bagged oil blocks in 2003, the investments have certainly paid off.

The oil blocks are producing crude and production is expected to go up further.

Expanding business

Now ONGC Videsh Ltd (OVL) is even looking at refining and pipeline projects in the country.

OVL, which entered Sudan two years back already has three oil blocks in Sudan.

The first one produces 300,000 barrels of oil per day. The second block is expected to start producing oil within the next few months, taking the total output to 500,000 barrels per day.

And the third block is currently being explored.

“The ONGC team has made a very definite contribution in production enhancement and oilfield development which our partners do acknowledge,” said Subir Raha, CMD, ONGC.

ONGC has already pumped in around $1.5 billion in Sudan and is ready to invest more as it has already bid for new oil blocks, is setting new pipelines and modernising refineries.

Volatile country

But why is ONGC sticking its neck out in a country this volatile?

That is because the entire amount it produces in Sudan will be sent back to India.

That too at a cost price, which could be as low as one-fourth of the final market price.

“The shadows of Darfur don’t affect us,” said Sanjeev Kakran, Vice President, ONGC, Videsh.

Sudan expedition

In fact ONGC Videsh believes its Sudan expedition will be one of its most profitable ventures. And to ensure that, it is even planning to minimise the cost of transporting oil.

The company is investing $150 million in a 741 km long pipeline from one of Sudan’s biggest refineries at Khartoum that will bring the oil all the way to India.

ONGC Videsh also plans to invest over a billion dollars to modernize another refinery in Port Sudan.

Political risks

When ONGC first stepped in to Sudan, the cynics were outright critical.

This is a country with high political risks but now ONGC and Sudan are true partners in progress in every step from exploration to refining and now even in these pipeline which will send the crude from Khartoum to port Sudan and then to India.