The Hindu Business Line : ONGC's stake in Syrian oilfields transferred to arm

ONGC Videsh Ltd (OVL), the overseas arm of Oil and Natural Gas Corporation (ONGC), has successfully completed the process of transferring the parent stake in Syrian oilfields to itself. A senior OVL official said, "We are managing the asset now. The Government has also been informed about the transfer."

Both ONGC and OVL had recently received approval of their respective board's for transfer of parent's stake to OVL. Last year, ONGC and China National Petroleum Company International (CNPCI) won a bid to acquire about 37.5 per cent stake in Syrian oilfields of Canadian oil company Petro-Canada.

While CNPCI's equity came through its subsidiary Fulin Investments SARL, ONGC directly funded 55 per cent of OVL's share through ONGC Nile Ganga. The balance 45 per cent came from ONGC-Mittal Energy Ltd (OMEL). The total exposure of the ONGC Group in the project is estimated at Rs 995 crore. This transfer of stake is expected to strengthen OVL's holding in the jointly acquired equity shares of Petro-Canada in Syrian oilfields. Besides, the asset transfer was expected to help resolve operational and accountancy issues, the official told Business Line.

Overseas properties

Most of ONGC's overseas properties are now managed through OVL. As a Navratna company, ONGC can either directly or through its subsidiary acquire assets. As the size of this particular asset crossed the current prescribed investment limit of OVL ($75 million or Rs 300 crore, whichever is less), the company had participated in the acquisition directly through ONGC Nile Ganga BV.

It had also roped in OMEL. In both cases, OVL was indirectly involved. The fields under this asset are the major oil producers in Syria. These fields produced oil at an average rate of 187,350 barrels/day during the first half of 2005. The remaining recoverable reserve potential of the asset is estimated to be more than 300 million barrels of oil.

Investment limit

Asked what is the status of OVL's demand for increasing its investment limit, the official said, the Petroleum Ministry is examining it. OVL has approached the Ministry to consider empowering its board to take investment decisions and increasing the investment limit. The company has placed two options before the Ministry.

The first option was to bring the investment limit in line with what is prescribed for the public sector enterprises, that is, an investment limit up to Rs 1,000 crore in the first phase and later raise it based on the recommendation of the high-level Krishnamurthy Committee on Synergy in Energy to raise it to Rs 2,000 crore.

Since investments beyond the permissible limit need to be approved by the Cabinet Committee on Economic Affairs, the company has often lost emerging investment opportunities, the official said.

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