India's ONGC confirms seeking Angola assets; no decision on Iran - Oil | Platts News Article & Story
Indian upstream player ONGC Videsh expects to conclude an agreement soon
in Kazakhstan for an exploration block in the Caspian Sea and has not yet
decided whether to pull out of Iran's South Pars project because of the threat
of US sanctions, exploration director Joeman Thomas said Tuesday.
ONGC Videsh, or OVL, the overseas arm of state-owned ONGC, is also
actively pursuing offshore opportunities in Angola but cannot confirm that it
is among the companies approached to take a stake in a block that ExxonMobil
wants to quit, he said in an interview.
"They have approached a few companies to gauge their interest," Thomas
said. "The general policy is that Angola is one of the countries where we have
been keen to make an entry," he said, adding that Angolan state oil company
Sonangol has pre-emption rights that it could exercise.
India's Economic Times said Monday that OVL would put in a bid for
ExxonMobil's interest in Block 31 offshore Angola. Total Wednesday confirmed
that it was considering quitting its participation in the block, where 19
discoveries have been made.
Angolan Oil Minister Jose Maria Botelho de Vasconcelos, who was in New
Delhi this week for the Petrotech 2010 conference and exhibition, said Monday
Sonangol is in talks with ExxonMobil and Total over their participation in
block 31.
Indian Oil Minister Murli Deora said Sunday local oil companies were
interested in acquiring interests in Angolan oil blocks and that India is
hoping to participate in the African country's delayed oil licensing round in
2011.
"The fact is that it is a very prospecting country for oil and gas and
for us as an upstream player, we would like to be in the right places and we
believe that Angola is one of these places," Thomas said.
OVL has bought a data package for blocks that Angola has offered for the
forthcoming bidding round. "When they announce the actual bids, we will
participate," said Thomas.
The company is now "very focused" on Latin America, Africa and Russia,
where "we have a good property," he said, referring to two operating blocks
and one participating block in the Sakhalin-1 field operated by ExxonMobil.
"We hope to have something finalized in Kazakhstan. Discussions have been
ongoing for an exploration block in the Caspian Sea ... it's in a very good
area southwest of Kashagan and adjacent to discoveries already made ... we are
quite upbeat about it," Thomas said.
OVL signed a heads of agreement with KazMunaiGaz in January 2009 for the
Satpayev Block in the Caspian Sea.
Managing director and CEO R S Butola said OVL was producing more than 8.8
million mt/year of oil and gas, having grown by 12-13% annually in recent
years mainly through acquisitions and organic growth.
"Now we have reached a stage where we tend to be bottoming out and we
want to make sure that we don't get stuck in that plateau and we continue to
move up," Butola said in the interview.
Thomas said that in that context, OVL was looking at oil sands and
further acquisition of producing properties "wherever they may be."
OVL already has a stake in the Carabobo heavy oil block with Indian
companies IOC and OIL in partnership with Repsol and Petronas and is looking
at Canada though Thomas said the geology was better in Venezuela.
"We need to balance ourselves by having something in Canada as well," he
said.
But Iran is proving a challenge, Butola and Thomas said, referring to
tough US sanctions, which were recently tightened to deter foreign oil and gas
companies from investing in Iran's energy sector as part of an international
effort to force Tehran to abandon its controversial nuclear program.
Iran Tuesday told OVL and its joint venture partners Hinduja Group that
they have three months to decide on taking a 40% stake in Phase 12 of the
offshore South Pars gas field before talks are permanently abandoned, the
semi-official Mehr news agency reported.
The Indian companies have been negotiating with Iran for more than three
years on the project that is expected to require investment of $7.8 billion.
The National Iranian Oil Co., which had previously set a deadline of
March for the agreement to be finalized, has told the two Indian companies
they expect an agreement by January 2011 or the talks are off.
Sharma suggested that OVL would not be rushed into signing up for the
South Pars project because of the ultimatum, noting that EU sanctions, which
were recently amended, imposed even tougher terms on oil and gas investments.
Tehran's ultimatum came just days before US President Barack Obama is due
to arrive in the Indian capital on an official visit. Oil industry sources say
Indian oil and gas companies will seek an exemption and argue that as an
energy-dependent country, India needs access to upstream assets abroad in
order to satisfy demand for energy in one of Asia's fastest growing economies.
Sharma noted that OVL's investments in Iran were made before the latest
round of sanctions. He said that in the case of the offshore Farsi field,
where OVL is operator with a 40% interest, discoveries have already been made
since the contract was signed in 2002. Other shareholders in the block are
Indian Oil Corp. with 40% and Oil India Ltd with the remaining 20%.
"We have to find ways to do business. Iran is more general ... nothing to
do with them or us. It's the issue at large, which is sanctions," said Butola.
"We have reservations as to how we can participate there ... the current
sanctions being what they are, we find it quite challenging ..." said Thomas.
Referring to Obama's forthcoming visit, the matter is "something for
political leaders to discuss," he added.
Regardless of politics, OVL needs "confidence that the investment that we
make is adequately protected," the company's upstream boss said.
--Kate Dourian,
kate_dourian@platts.com
