|OVL chairman DK Sarraf|
WHAT seems to be a strategic victory for ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp, Kazakhstan has offered a stake in a medium sized Abai oil block in the Caspian Sea to the India oil explorer. Earlier, last year the country had blocked India's $5 billion deal to take stake in Kashagan oilfield. The block Abai...which was earlier being operated by Statoil of Norway, is adjacent to OVL's Satpayev exploration block. Kazakhstan made the offer at the meeting of the Joint Working Group in Astana late last month, a media report quoting official sources said.
OVL has been offered 25 percent interest in the Abai block, which according to Kazakhstan government estimates has 2.8 billion barrels of oil reserves.
Kazakhstan had last year blocked OVL's $5 billion deal to buy an 8.4 percent stake in the Kashagan oilfield from US energy giant ConocoPhillips. Kazakhstan exercised its pre- emption right to first buy the ConocoPhillips' stake and then sell it off to Chinese firm CNPC.
In 2005, India had lost another $4.18 billion deal to buy PetroKazakhstan to China.
The country now realizes that they were more than unjust to India and have given all stakes to China. Statoil had in February 2013 given up the Abai offshore block spending about seven years negotiating to start exploration.
State-owned KazMunaiGaz National Co held 75 percent interest in the block with an estimated 387 million tons of resources (2.8 billion barrels). Statoil had 25 per cent interest which is now being offered to OVL. Delays and cost overruns have dogged Kazakhstan's efforts to expand offshore production of oil and gas. OVL had planned to drill two exploration wells on Satpayev in 2014 and 2015 but delivery of a drill rig has been delayed and will now be available only next year.
OVL entered Kazakhstan in 2011 by signing agreements with KazMunaiGas (KMG), the national oil company of Kazakhstan for acquisition of 25 percent participating interest in Satpayev exploration block. This transaction marks the entry of OVL in hydrocarbon rich Kazakhstan. Satpayev exploration block, located in the Kazakhstan sector of the Caspian Sea, covers an area of 1482 sq.km at a water depth of 6-8 mts. Satpayev Block is situated in close proximity to major discoveries in the North Caspian Sea. OVL carries KMG for its 75 percent share and therefore bear the entire 100 percent expenditure during the exploration and appraisal phase of the project.
OVL estimates a peak output of 287,000 barrels per day from the Satpayev and Satpayev Vostochni (East) structures.
The Miniratna CPSE under the administrative control of the ministry of petroleum and natural gas owns participating interests in 32 oil and gas assets in 16 countries and contributes to 12 percent and seven percent f oil and natural gas production of India respectively. In terms of reserves and production, OVL is the second largest petroleum Company of India, next only to its parent ONGC. The primary business of OVL is to prospect for oil and gas acreages outside India, including exploration, development and production of oil and gas.