Indian OVL to garner $850 m from oil investment in Sudan
The Telegraph, India
New Delhi, March 13: ONGC Videsh Ltd (OVL) is expected to rake in around $850 million during the current financial year from its share in the Greater Nile oilfield in Sudan.
OVL expects to get around 3.3 million tonnes of crude this year as its share in the Greater Nile oilfield and, like all other companies, has to pay a corporate tax on its profits.
The 25 per cent stake in the field was acquired for $670 million and another $160.4 million has been spent on developing it.
The sweet crude from the oilfield is considered as the same quality as Nigeria’s Bonny Light variety. “The average price could conservatively work out to around $46 per barrel for the year,” a senior company official told The Telegraph.
According to petroleum ministry sources, OVL’s share in the balance proven oil reserves of the Greater Nile project works out to around 20.4 million tonnes. However, this figure could go up as the field is developed further.
An ONGC official said, “It is quite common to upgrade the reserves of good oilfields as they are developed further and more oil is found in-place. This happened in the case of Mumbai High as well.”
The joint operating company, which includes the Chinese national oil company and Malaysian national company Petronas, is expected to invest another $350 million for further exploration and development of the Greater Nile project during 2005-09. OVL will have to foot 25 per cent of this cost, which works out to $87.5 million.
Having established its credentials through the Greater Nile project, OVL has gone on to acquire a 24.1 per cent interest in exploration block 5A and a 23.5 per cent share in block 5B in Sudan. The Indian company has paid $135 million for the two blocks and spent another $13 million on exploration and development since then.
Some oil has already been discovered in block 5A and OVL’s share at this stage has been estimated at 5.9 million tonnes.
The calculated risk that OVL took in moving into the strife-torn Sudan – after the Canadian company, Talisman, pulled out due to pressure from orthodox church groups – appears to have paid off. With crude prices shooting up during the current year, the value of these fields has also appreciated.