ONGC Videsh gives up on Algeria and Oman

Vol 6, PW 5 (08 May 02) Exploration & Production

ONGC VIDESH HAS declined an invitation by Sonatrach of Algeria to bid for exploration block 242.

It's understood the Sonatrach offer came in last month but that OVL, acting on advance intelligence, turned down the offer. "We got to know that Sonatrach recently drilled a well on this block and it turned out to be a dry hole," a source tells PETROWATCH.

"We got to know through intelligence reports the results of the well and took a decision well in advance." Other companies are expected to follow OVL's lead. "I'm sure other companies know about the dry hole and will now stay away." The Sonatrach dry hole is not the only bad news for OVL.

In Oman, a Chinese consortium outbid OVL to buy into a small, discovered oilfield producing 300,000 tonnes a year. Japanese explorer Japex offered OVL 50% of its 100% stake in the Oman field.

Japex was asking $40m for a 50% stake and operatorship but OVL was willing to pay only $31m. Negotiations dragged on by which time a Chinese consortium entered the fray and offered Japex the asking price of $50m.

"We lost because news of our offer leaked." At Sakhalin, however, where OVL has a 20% stake, there's some good news. Operator ExxonMobil should begin drilling this year from what is reported to be the world's largest drilling rig.

"Drilling will begin onland and then drift some 10km offshore at an angle to reach a target depth of 2,500 metres. Some of the most modern technology will be used.

Equipment and people have to withstand the harsh Siberian cold."