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Balaji C. Mouli

NEW DELHI, Feb. 19

ONGC Videsh Ltd (ONGC-VL), the overseas exploration arm of ONGC, has sought the Government's approval to start negotiations for acquiring a 50 per cent stake in a discovered oil producing field in Oman and a 25 per cent stake in another discovered oil field in Sudan.

The Empowered Committee of Secretaries is scheduled to consider this proposal on February 25, according to official sources. If ONGC-VL is successful in acquiring stakes in these fields, it will get a share of 3.2 million tonnes of crude per annum.

Going by analysts' estimate, the proposed acquisition in Sudan will involve an investment of $600-800 million. The Oman field will, however, involve a far lesser investment.

Currently, State-owned Omani Oil Company and Japex hold 50 per cent equity each in the Oman field. ONGC-VL plans to replace Japex since the latter wants to exit the venture. According to sources, Japex plans to exit the venture since the Japanese national oil company is undergoing restructuring. In the case of the Sudan oil field, Canadian firm Talisman has a 25 per cent stake, Chinese national oil company has 40 per cent, the Malaysian national oil company Petronas holds 30 per cent and the Sudan National Oil Company 5 per cent. ONGC-VL plans to acquire 25 per cent stake in the Sudan field since Talisman plans to exit the venture. This is the second major move to acquire oil equity in discovered fields abroad following the acquisition of 20 per cent equity stake in the Sakhalin I oil and gas exploration block in Russia in January 2001. ONGC-VL's participation in the Russian field involves an investment of $1.7 billion over the next five years. The investment in the production sharing contract (PSC) is expected to yield 2-4 million tonnes of crude per annum (beginning 2005) and 5-8 million cubic meters per day of gas (beginning 2006).

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