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OVL produced a total of 6.62 MMT of O+OEG
in 2005-06, up from 5.06 MMT produced in the
previous year.The company earned a consolidated
total income of US$ 1.84 billion in the financial
year ending 31 March 2006 (FY06), compared to
US$ 1.38 billion in the previous year.
The consolidated profit after tax stood at
US$ 202.6 million in FY06.
OVL in the Arab World
In the Arab world, OVL is present in Iraq, Syria,
Qatar, Libya, Sudan, Egypt and Saudi Arabia.
OVL in Sudan
OVL's investment in Sudan is the largest by an
Indian company - around US$ 2 billion - this is not
only providing the company with a source of crude
oil but is also bolstering its revenues.
In 2005, OVL successfully completed a 12-inch,
741 km multi product pipeline system, with a
contract price of US$ 194 million.The pipeline
is designed to transport motor spirit, gas oil and
white products such as kerosene and fuel oil.
The project system included construction of the
main line, piping works for six pumping stations,
10 block valve stations, laying of fibre optic cable
for voice and data transfer and integrating SCADA
and telecom systems for data management and
communication.The company completed this
project two months prior to schedule, thereby
setting a benchmark in international project
implementation.
Company Background
ONGC Videsh Limited (OVL), a wholly owned
subsidiary of the Oil and Natural Gas Corporation
(ONGC), was incorporated in 1965 as
Hydrocarbons India Private Limited. It became a
deemed public company in 1975 and was renamed
as OVL. It carries out exploration and production
of oil and gas overseas. It acquires oil and gas fields
in foreign nations, and explores, produces,
transports and exports oil and gas as an
international petroleum company.
OVL is the second largest Indian company in
terms of oil and gas reserve holdings. In 2002-03,
it became the first Indian company to produce oil
and gas outside India. It is the Indian Nodal Agency
for overseas petroleum business and is a
permanent participant in all concerned bilateral
interactions and joint working groups of the
Government of India. Currently, OVL is
participating in 25 oil and gas projects, spanning
15 countries - Vietnam, Sudan, Russia, Iraq, Iran,
Myanmar, Libya, Cuba, Brazil, Nigeria JDA, Egypt,
Qatar, Nigeria, Columbia and Syria.As a major
international player, OVL acquired interests in
9 foreign oil and gas projects during 2005-06.
ONGC Nile Ganga B.V. (ONGBV) is a wholly
owned subsidiary of OVL, with principal office in
the Netherlands. OVL has also set up a JV company
with Mittal Investments to leverage the strengths
of this global steel giant, to strengthen its position
on the international oil and gas assets.
46
ONGC VIDESHLIMITED
OVL in Syria
Block 24
In 2004, a consortium of OVL (60 per cent) and
IPR International Limited (40 per cent) was
awarded the exploration rights in Block 24 by
the Syrian Ministry of Petroleum and Mineral
Resources.The contract provided for a three-
phased exploration period of seven years, with
IPR being the operator in the block.
Al-Furat
In 2006, ONGBV and Furlin Investments S.A.R.L.
(a subsidiary of China National Petroleum
Company International) jointly acquired entire
shares of Petro-Canada's interest in four
production sharing contracts, covering 36 major oil
producing fields in Syria.A new company, Himalaya
Energy (Syria) B.V., was formed for this acquisition,
with ONGBV and Furlin Investments holding
50 per cent stake each.
OVL in Egypt
In August 2005, a consortium of OVL and IPR
acquired North Ramadan Block No. 6, which
covers 290 square kilometres in the central part
of the Gulf of Suez province. OVL has a 70-per
cent share in the block. In the exploration phase,
IPR will be the operator, while during the
development phase, both OVL and IPR would be
joint operators.The first exploration phase of the
block is of 36 months, while the other two are
of 24 months each. OVL commits to invest
US$ 15.5 million in the block.
OVL in Libya
OVL is present in Libya in the form of a 49:51 JV
with the Turkish Petroleum Overseas Company
(TPOC), a subsidiary of the National Oil Company
of Turkey.This JV is for exploration Blocks NC-188
and NC-189, which together cover 8,646 square
kilometres. OVL has invested US$ 30 million in
the exploration programme.TPOC acts as the
operator in the blocks.
In March 2003, OVL acquired a 25-per cent
interest in the Greater Nile Oil Project for
US$ 669 million.This project is an onshore crude
oil production area, comprising five blocks that
cover nearly 50,000 square kilometers in the
Muglad Basin in southern Sudan. OVL's partners
in this project are China National Petroleum
Company (40 per cent interest), Petronas Carigali
Overseas Sdn Berhad (30 per cent interest) and
the Sudan National Oil Company (5 per cent
interest). Currently, this project supplies around
3 million tonnes per annum of crude oil to India.
This represents the first instance of an Indian
company importing crude for refining from an
overseas establishment in which it holds an equity
stake.
OVL has also acquired stakes in following two
exploration blocks in Sudan from OMV of Austria:
• Block 5A - OVL holds a 26.125-per cent stake,
while Petronas, Malaysia and Sudapet, Sudan hold
68.875 per cent and 5 per cent stakes
respectively.
• Block 5B - OVL holds a 24.5-per cent stake,
while Lundin Oil, Sweden; Petronas, Malaysia; and
Sudapet, Sudan hold 24.5, 41 and 10 per cent
stake respectively.
OVL in Iraq
In May 2001, OVL signed a contract with the Oil
Exploration Company of the Ministry of Oil, Iraq,
making OVL the sole licensee for the on-land
exploration Block-8 in Iraq.The company incurred
an expenditure of US$ 15 million in the first phase
of exploration, with the total development cost for
the project estimated at US$ 250 million. Phase
1 of the contract, scheduled over a period of three
years, includes reprocessing and interpretation of
existing 2-D seismic data, acquisition, processing
and interpretation of 1000 line kilometres of 2D
and 300 sq km of 3D seismic survey, and drilling
of two wildcat wells.
47
operations in Australia, Egypt, Iraq, Iran, the Ivory
Coast, Libya, Myanmar Sudan, Saudi Arabia and
Syria.
Post-war Scenario in Arabic Countries
OVL was able to bid for various oil and gas
exploration contracts in the Arab countries,
including a large number of pre-Gulf War contracts
that had been cancelled subsequent to the war.
The opportunity created by the re-bidding process
for these contracts allowed OVL to expand its
operations in the Arabic region.
Future Plans
Inorganic Growth
In the past few years, OVL has grown its
operations in the Arab countries by entering into
mergers, JVs and strategic acquisitions.The
company plans to continue with the similar strategy
and therefore targets several E&P opportunities.
It plans to acquire oil and gas producing assets in
select countries in Africa, Middle East, Central Asia
and South East Asia. OVL is considering
opportunities in the oil and gas rich geographies,
including the Middle East.
In December 2005, OVL has been awarded
exploration Block 81-1 located in onshore
Ghadames Basin of Libya.The company is required
to complete acquisition of 500 km of 2D seismic
data, 500 sq. km. of 3D seismic data, and drilling of
one exploration well over an exploration phase of
five years. OVL is operator holding complete
participating interest in the block. OVL has set up
a branch office at Tripoli and posted a senior officer
as Country Manager in Libya.
OVL in Qatar
In March 2005, OVL and IPR Red Sea - in a
70:30 JV - signed an Appraisal, Development and
Production Sharing Agreement with the
Government of Qatar for appraisal of the Najwat
Najem Oil Structure.The project involves technical
studies, seismic reprocessing and drilling wells,
with a total duration of 20 years.
OVL in Saudi Arabia
In 2003, ONGC and Indian Oil Corporation (IOC)
entered into a JV for acquiring stakes in the South
Ghawar and Red Sea gas fields in Saudi Arabia. OVL
held a majority stake in the consortium bidding for
gas field development, while IOC was also bidding
for associated petrochemical and power projects.
Factors for Success
Government Support
OVL has always received strong support from the
Government of India, which in January 2000
granted the company exclusive empowerment vide
Office Order No. DPE ii (32)/96-Fin.This allowed
OVL single window clearance for overseas
upstream projects irrespective of investments
involved.
International Expertise
OVL has international expertise in the field of oil
and gas exploration.The company has its major48