ONGC Videsh earmarks $1bn for oil production growth

KOLKATA (miningweekly.com) – ONGC Videsh, the overseas arm of Indian exploration and production (E&P) major ONGC, is aiming to complete a $1-billion capital expenditure programme during the 2017/18 financial year.

This investment spread across exploration, development and production will enable ONGC Videsh to achieve oil production growth of 15%, or 14.35-million tons oil equivalent, from its assets by the end of the 2017/18 financial year.

Officials say the momentum of investments will be maintained in subsequent years to meet the targeted 20-million ton oil equivalent by 2020.

The fresh capital investments will be riding on discoveries made in neighbouring Bangladesh, followed by Kazakhstan and Namibia, which the company recently entered.

Part of the investments will also be earmarked for ONGC Videsh’s asset in Colombia, where a commercial discovery has recently been established. Trial production of an estimated 4 500 bbl/d will soon start.

ONGC Videsh has a share in six oil blocks in Colombia, one of which produces 35 000 bbl/d.

However, the E&P major’s biggest bet will be on the Vankor oilfields in which the company last year acquired a 15% stake from Russian giant Rosneft for an estimated  $1.26-billion.

The Vankor fields, with their an estimated recoverable reserves of about 2.5-billion barrels, will give ONGC Videsh the right to secure 3.3-million barrels a year of oil.

Meanwhile, in a related development, Indian oil refiner-marketer Hindustan Petroleum Corporation Limited (HPCL) has decided against investing in Vankor oilfields to mark its entry into downstream exploration and production businesses.

Significantly, the Indian government has approved the merger of HPCL and ONGC. The acquisition of an additional stake in Vankor by HPCL would have ensured a much higher right to production from Vankor, Rosneft’s second largest fields accounting for about 4% of Russia’s total oil production.