ONGC Videsh budgets more than $4bn spend

Vol 15, PW 15 (09 Feb 12) People & Policy

Service contractors can look forward to high value tenders worth millions of dollars this year from ONGC Videsh (OVL).

PETROWATCH learns ONGC’s overseas exploration arm plans to spend a staggering Rs20,461cr ($4.12bn) as CAPEX in 2012-13. More, OVL has budgeted to spend Rs92,800cr ($18.6bn) during India’s next ‘five-year plan’, which begins in April 2012 and continues until March 31, 2017.

“Most of this money will be spent on paying our share of development costs at assets where we already have stakes, like in Venezuela, Brazil and Kazakhstan,” confirms a senior OVL source. “We are also looking at acquiring stakes at ‘shale gas’ assets, not to mention several promising ‘oil sands’ projects in Canada.

” OVL currently has stakes in 32 ‘projects’ across 13 countries. These projects in turn consist of 52 ‘assets’ in total: of which 26 are exploration blocks, 20 are under development, and six are producing.

OVL adds it wants to continue to maintain a “balanced portfolio” by acquiring exploration blocks as well as discovered/producing assets. “We must pay heavy premiums when we pick up stakes at discovered/producing blocks,” he adds.

“But then again this is worthwhile as there’s no exploration risk involved. But we also have to invest in maintaining production by drilling additional exploratory wells and using ‘improved and enhanced oil recovery.

” OVL’s parent ONGC has set it a target to secure 20m t/y of equity oil by 2018, increasing to 35m t/y by 2030. Separately, OVL might have produced 9.4m tonnes of ‘oil equivalent’ in 2011 but this is expected to drop to just 9m tonnes in 2012 because of political unrest in Syria, North Sudan, and South Sudan.

“Production from our Syrian and Sudanese blocks is decreasing also because of ‘natural decline’,” adds OVL.