The Hindu Business Line : ONGC Videsh pushes for raise in investment limit

ONGC Videsh Ltd (OVL), the overseas arm of Oil and Natural Gas Corporation (ONGC), has yet again stepped up its demand for an increase in its investment limit, which is set at $75 million or Rs 300 crore, whichever is less.

Sources said the company has approached the Petroleum Ministry to consider empowering its board to take investment decisions and increasing the investment limit.

Though the Government had last year increased the investment limit from $50 million (Rs 200 crore) to $75 million (Rs 300 crore), OVL is of the view that such low investment limits had little relevance in the high-value oil and gas sector.

Since investments beyond the permissible limit need to be approved by the Cabinet Committee on Economic Affair , the company often loses emerging investment opportunities, sources told Business Line. The issue was discussed at the recent board meeting of ONGC.

Elaborating, they said today the deal sizes were in the range of $400-$800 million. In 70 per cent of the deals, the buyers do not want to wait, and as a company into the business of acquiring equity in oil and natural gas assets overseas, OVL cannot afford to close such windows of opportunity.

New deals: The company, which is negotiating a number of deals, expects to spend close to Rs 6,700 crore in 2005-06. ONGC, through OVL, has planned overseas oil and gas equity of 20 million tonnes by 2010. OVL has managed a strong foothold in a number of lucrative acreages, winning some of them against stiff competition from international oil majors.

OVL has so far acquired 23 projects in 14 foreign countries. The projects are in Vietnam, Russia, Sudan, Iraq, Iran, Lybia, Syria, Myanmar, Australia, and the Ivory Coast. It is further pursuing oil and gas exploration blocks in Algeria, Australia, Indonesia, Nepal, Iran, Russia, the UAE and Venezuela.

India and China, the world's two most populous nations, are aggressively competing for stakes in foreign oil projects to meet the surging oil demand of their expanding economies. India imports 70 per cent of its crude oil requirement.