The Hindu Business Line : Reliance may tie up with ONGC Videsh

New Delhi May 13 In another significant public-private initiative, ONGC Videsh Ltd (OVL) and Reliance Industries Ltd (RIL) could soon strike a strategic relationship for overseas oil and gas projects.

OVL is keen to revive talks with Iraq to get a stake in the Tuba oilfield in that country and though this would not be the company's first venture in Iraq, it could mark a beginning of an alliance between OVL, the overseas arm of ONGC, and the private sector major RIL.

While talks on the deal are yet to begin, indications are that OVL and RIL have also resumed discussions on the partnership. A senior ONGC official said, "Apart from Tuba the company is open to looking at other projects with RIL."

For Tuba oil field, OVL and RIL would partner Sonatrach of Algeria.

OVL with its partners had earlier completed negotiations with the Iraqi Government for a stake in the oil field in southern Iraq, but the deal could not be taken to its logical conclusion due to the political scenario in that country.

The US-led attack on Iraq had led to termination of all deals entered into by the Saddam regime. The consortium of OVL, RIL and Sonatrach would have seen OVL and RIL holding about 30 per cent stake each and Sonatrach the remaining 40 per cent, thus giving the Indian companies the controlling stake jointly.

The Petroleum Minister, Mr Murli Deora, during his bilateral talks with the Iraqi Oil Minister, Mr Hussain Al-Shahristani, at the Second Asian Ministerial Energy Roundtable in Riyadh recently, had raised the issue of moving forward OVL's participation in Iraq's upstream oil sector. Indian oil firms are under a mandate to seek oil equity abroad as the country is heavily dependent on imports.

Besides, the search for oil from overseas has become urgent with high volatility in oil prices. Iraq, as per reports, has proven oil reserves of 112 billion barrels, which makes it the world's second largest, after Saudi Arabia. OVL already has tied up with the steel baron Mr L.N. Mittal's group company

Since the agreement with the Mittal group clearly identifies about 28 countries, mainly CIS countries, sources do not foresee any conflict with the possible tie-up between RIL and OVL. Industry experts say partnerships between PSU and private sector players would be beneficial for both.

A public undertaking could bring value in terms of Government-to-Government relationships and, in this case, OVL could also bring to the table expertise and global credibility.

A private sector player, on the other hand, helps in bringing in speed and the right amount of aggression to close such transactions, as a lot of these deals depend on things managed on the ground, experts said.

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