Algeria, Iraq and Indian 'Red Tape'
Don't get too excited at news that ONGC is in talks with Sonatrach of Algeria for a discovered oilfield in southern Iraq.
With the exception of Vietnam (see table below), ONGC Videsh (OVL) has been unable to acquire equity in any project outside India since its inception in 1965 as the corporation's overseas wing. More than likely the same fate awaits plans between Sonatrach and OVL for the Tuba oilfield in Iraq.
Tuba was discovered in 1977 and contains the prolific Zubair and Mishrif reservoirs. In 1998, ONGC chairman Bikash Bora said it has the potential to produce 230,000 barrels a day - almost equivalent to daily output at the Bombay High.
In partnership with Reliance, OVL has pursued the Tuba opportunity for almost three years, without success. This is not entirely the fault of Managing Director Atul Chandra and his slim staff of 47.
It has more to do with inherent bureaucratic defects in execution of the Indian oil ministry's stated policy to acquire "oil equity abroad". When ministry approval comes, the opportunity is often long gone.
Remember Indian Oil Corporation's effort to acquire a stake at Balal in Iran With Tuba, external factors also play a role. Iraq is subject to United Nations sanctions and any oil activity there by OVL would be in breach of Security Council resolutions.
A proposed MOU between OVL andSonatrach is only significant if sanctions are ever lifted. Until then the only point worth watching is if Sonatrach sticks to a promise to grant OVL rights to an oilfield in Algeria.
If this promise is contingent on successful acquisition of the Tuba oilfield, the answer must surely be 'no'.