ONGC VIDESH TAKES OVER 25% EQUITY
IN THE SUDANESE OIL FIELD
ACQUISITION
A PATH-BREAKING STEP TOWARDS OIL SECURITY: RAM NAIK
Shri Ram Naik, Minister
of Petroleum & Natural Gas announced here today that ONGC
Videsh (OVL) has taken over 25% stake in the Greater Nile Oil
Project of Sudan from Talisman Energy of Canada on 12th
March, 2003. The first ever acquisition of a large producing field
by India overseas at a sale price of US$ 720 million (Rs. 3,600
crore) is a landmark in the oil history of India and a path-breaking
step forward towards oil security of the country.
Excellent negotiating
strategy, coordination between ONGC, OVL, Ministry of Petroleum
& Natural Gas and also between the Ministries of External
Affairs, Finance and Law during the finalisation of the deal was
the key element in the success story. This acquisition has further
proved India’s capability to acquire such mega projects within
the internationally set time frame.
OVL's share in this
project would be a little over 3 milllion tonnes per annum. However,
this deal has been concluded w.e.f. 1st September,
2002 and therefore the oil production and the revenues accruing
from this time till date would be credited to OVL account. Since
the payment has been made only on the 12th March, 2003,
the interest on the amount withheld by OVL would have to be paid
to Talisman. Even after payment of the interest and also various
project expenses and settlement of some other claims, OVL had
to pay only about US$ 670 million (Rs. 3,350 crore) as the final
settled price against the cabinet mandated purchase price of upto
US $ 750 million (Rs. 3,750 crore). Shri Naik complemented the
excellent negotiating strategy followed by OVL and its Advisers.
Incidentally, India’s
share of equity oil from this field is about 10% of the country’s
domestic production. In the current scenario of war clouds over
the gulf region, the acquisition of equity oil of such a significant
quantity assumes great importance as the Indian share of crude
oil from the field is readily available for supply to India.
The Minister informed
that the gross sales revenues of this project for the year 2002
realised by Talisman was about US$ 500 million (Rs. 2,500 crore)
which is about two times the estimate by OVL while working out
its economics which was presented to the Cabinet. The sweet crude
oil produced in the project has high market demand and is currently
selling at about US$ 30 per barrel. In addition, two new commercial
discoveries have also been added to the project during the period
OVL carried out negotiations.
Shri Naik also thanked
the Government of Sudan, Chinese National Oil Company and Malaysian
National Oil Company Petronas for allowing entry to OVL in this
project and also for withdrawal of their right of first refusal
which they had exercised soon after OVL Sale and Purchase Agreement
was submitted to them. This development, the Minister added, demonstrates
the reasonability of the price paid by OVL and also excellent
diplomatic relations which exist between India and these countries.
He hoped that Indian, Chinese and Malaysian Oil Companies would
work together in many more international projects to help their
countries in bringing equity oil.
The Minister also
complemented the oil companies in India particularly OVL for having
spread their wings in Myanmar, USA, Iraq, Syria and Libya by acquiring
exploration blocks. The projects, in addition to Sakhalin-I, would
soon be adding additional equity oil to the country. He noted
with satisfaction that Gas sales from Vietnam have already started
resulting in cash flows to OVL. He hoped that a number of new
projects which are under negotiations or on the radar screen of
OVL would fructify soon and would further add to the energy security
of India.
