Return
to Story Page
To print: Select File and then Print from your
browser's menu
Murali Gopalan
Mumbai, Oct 15: Oil India plans to join hands with Premier Oil of the UK to work on an exploration block in Indonesia. Top sources told The Financial Express that the Indian company would take a stake of around 20 per cent in the venture.
In return, Premier Oil will partner Oil India in upstream activities here on new blocks which will qualify for all NELP (new exploration licensing policy) benefits. These will also include deepwater blocks and the specific NELP terms are expected to be announced by the government shortly.
According to sources, estimates are still to be made on the cost of the Indonesian project and Oil India's equity component. Also, it is likely that there will be other world oil majors who could also be in the race to work on the block, though no confirmation could be got.
This is Oil India's second major foray overseas in the space of barely three months. It recently got the cabinet approval to work with Total of France in a $10 million exploration contract in Oman. Theassignment involves an effort on an onshore exploration block next to a gasfield where Oil India will hold a 20 per cent stake.
Sources said this new thrust indicates a serious effort by the company top brass to continuously seek opportunities abroad. This, again, has been the agenda of ONGC Videsh, the overseas exploratory arm of the Oil and Natural Gas Corporation. "The idea is to restructure Oil India's focus on the lines of ONGC Videsh, which has been successful in bagging good contracts overseas," they added.
These include Kazakhstan, Azerbaijan and, of late, Iraq where an exploration block, Abhokima, is proposed to be worked on. Both, the Indian Oil Corporation and Gas Authority of India, are keen on participating in this project.
The field has the potential to yield 200 million barrels of oil. Considered large, sources said seismic work needs to be done on the block before work gets underway. "There is enormous potential here and India would also benefit in its relations with Iraq through ONGCVidesh's efforts," they added.
ONGC Videsh has also teamed up with Reliance Petroleum to work on a discovered field in Iraq called Tuba which can yield up to 400 million barrels of oil. Though details on the equity sharing arrangement are not known, sources say the two will hold 50 per cent apiece. Reliance Petroleum is believed to be keen on expanding its presence in Iraq for exploration activities, though no official confirmation from the company could be sought.
Experts believe that Iraq would be a strategic move for ONGC Videsh as long-term arrangements of sourcing crude cannot be ruled out. This would make enormous sense what with refining capacity in the country likely to increase substantially with the entry of private players like Reliance Petroleum and Essar Oil.
The R-Group report on restructuring the Indian oil sector had stressed the importance of acquiring acreage abroad for finding oil and gas. "India possesses the competence, manpower and service industry to explore, develop and accessthe reserves of oil and gas in international basins," the report stated.
According to the committee which prepared the study, international opportunities for equity oil are available only for a very short while - not more than two months. The procedures today not allow such opportunities to be seized. To promote acquiring equity oil, the R-group suggested setting up of an empowered committee, chaired by the petroleum secretary and with representations from government departments such as the ministries of external affairs, finance and commerce.
The R-group was of the view that further incentives like tax relief/exemption were also required for E&P activities abroad. To enable Indian companies to raise the capital required in foreign currency, domestic oil and gas production should be treated as deemed export so that a part of the revenue can be considered to have been earned in foreign exchange.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
------------------------------------------------------------
This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
------------------------------------------------------------