Business Daily from THE HINDU group of publications
Thursday, May 10, 2007
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Business Daily from THE HINDU group of publications Thursday, May 10, 2007 ePaper |
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Petroleum Corporate - Announcements
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New Delhi May 9 ONGC Videsh Ltd (OVL) continues with its success in Iran's Farsi offshore block. The overseas investment arm of ONGC struck gas in the fourth well on the block recently. It has already discovered oil in the three previous wells. Speaking to Business Line, Mr R.S. Sharma, Chairman and Managing Director of ONGC, said that OVL and its partners will now present a development plan to the Iranian authorities to commence production. The plan is likely to be submitted in three months. However, he refused to specify the quantity of the gas find. According to sources in the oil industry, the in-place reserves are estimated at around 10 trillion cubic feet and oil reserves at one billion barrels. On the expenditure made by the company during the exploration phase, Iran will pay 35 per cent rate of return. For the development phase, the rate of return is yet to be determined. OVL had won the bid for the Farsi offshore block (area of 3,500 sq km) in early 2002 and signed a four-year exploration service contract (ESC) with the National Iranian Oil Company on December 25 that year. It is the operator of this exploration block and owns 40 per cent participating interest. Other partners in the block are IOC (40 per cent) and Oil India Ltd (20 per cent). As per the service contract, the minimum investment commitment in the exploration phase is $27 million, with OVL's contribution being $10.8 million. It is also mandated to undertake a work programme, which includes seismic survey and drilling of four wells. Against the minimum financial commitment of $27 million for the entire duration of the contract, the consortium provisioned a budget of $79 million. According to rules in Iran, foreign oil companies cannot bring oil and gas out of the country. However, if the Iranian Government makes an exception in this case, OVL might actually get oil from Iran instead of just petrodollars. The ONGC-hired rig, Kedarnath, was deployed for the Farsi drilling operations. The entire geological and geophysical activities were done by OVL. Out of the committed four wells, the first well (BB-4) was drilled to the final depth of 2,395 m.
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