The Hindu Business Line : Hike in oil recovery boosts OVL's Sudan field earnings

AN increase in oil recovery from 2,70,000 barrels per day to 3,27,000 bpd coupled with a rise in global crude oil prices has resulted in a dramatic rise in ONGC Videsh's (OVL) earnings from the Sudan oil field.

As against its earlier estimation of recovering the entire investment of $600 million by the end of next year, the company is now set to recover the same latest by April-May 2005.

OVL holds 25 per cent stake in the Greater Nile Oil Project (GNOP) in Sudan along with China National Petroleum Corporation (40 per cent); Petronas Carigali Overseas of Malaysia (30) per cent; and Sudan National Oil Company (5 per cent). The project, located at the Muglad basin, is estimated to have a reserve of more than one billion barrels spread over10 fields.

OVL participated in the consortium in March 2003 at an estimated plateau rate of production of 2,70,000 bpd at a time when oil price was $33 per barrel.

According to sources, beginning last week the consortium was successful in enhancing the oil recovery to the level of 3,27,000 bpd. It has also decided to maintain the enhanced level of production as plateau rate.

Stating that the development had enhanced the return on investment dramatically for OVL, sources said the company would recover the entire investment in less than six months from now.

OVL participated in the project at a time when Canadian oil major Talisman made an exit . The project was also the first to offer equity-crude to the Indian oil major.

Apart from GNOP, OVL was also negotiating for a $1 billion turnkey contract for modernisation and revamping of a refinery in Sudan. The present capacity of the refinery is 3 million tonnes. OVL has proposed to carry out the order on its own.

The company has already won a project for construction of a gas pipeline in the country.