ONGC Videsh Ltd, the overseas arm of Oil and Natural Gas Corporation, is in talks with two Middle-East Asian companies to acquire stake in an oil field in Sudan that is estimated to hold oil reserves in excess of 3.5 billion barrels.
OVL is talking to Gulf Petroleum Corporation and Al-Thani Group for acquiring 11 per cent stake in exploration Block 3 and 7, in eastern Malut basin of Sudan, industry sources said in New Delhi.
Production from Block 3 and 7 is expected to begin in 2005 and reach 10 million tonnes per year.
Block 3 and 7 have Petronas of Malaysia and China National Petroleum Corporation of China as majority stake holders. Sudan National Petroleum Corporation also has a 5 per cent stake.
OVL has offered a little less than $40 million to buy 11 per cent stake from the two firms.
"Talks have almost concluded and OVL may sign the deal next month," they said, adding the petroleum ministry will move a Cabinet note for seeking approval for the investment and the development expenditure shortly.
Though the bid price is well within OVL's special empowerment for investments overseas, a proposal is being sent to the cabinet committee on economic affairs to get clearance for further expenditure in developing the field.
The CNPC-led consortium will bring to production Blocks 3 and 7 in 2005 with an initial 170,000 barrels per day (8.5 million tonnes) on stream.
Sources said OVL, which already holds 25 per cent stake in a producing oil field, is also talking to CNCP for a stake in its Block 6, which is scheduled to go on production in 2005-06. The block, where CNCP holds 100 per cent interest, is estimated to hold one billion barrels of oil reserves.
Block 6 in Western Kordofan, operated by Chinese company CNPC, comes on-stream at 60,000 barrels a day (3 million tonnes annually), eventually rising to 180,000 b/d (9 million tonnes per annum).
OVL's 25 per cent stake in Greater Nile Petroleum Operating Co, which operates the Heglig and Unity fields of Block 1, 2 and 4 in Sudan, produces 13 million tonnes crude annually.
It is shipping half of its 3.2 million tonnes entitlement in GNPOC to India for processing at group firm Mangalore Refinery and Petrochemicals Ltd, they said.
Nine exploration wells had been drilled in Block 3 and 7, which hold previously discovered Agordeed oilfield and Adar oilfield. Further, two more discoveries totalling 200 million barrels of in-place oil reserves, have been made in the northern area of the block.
In Block 6, 24 exploration wells have been drilled so far and Fula North oilfield with estimated 100 million tonnes of in-place oil reserves established.