The Hindu Business Line : OVL may be allowed to acquire stake in Venezuela’s oil field

New Delhi, Jan. 22 An Empowered Committee of Secretaries (ECS) headed by Petroleum Secretary, Mr M. S. Srinivasan, is understood to have recommended allowing ONGC Videsh Ltd (OVL) to acquire stake in Venezuela’s San Cristobal oil-field. The recommendation of the ECS will now be taken to the Cabinet Committee on Economic Affairs (CCEA), official sources said.

OVL, the overseas investment arm of ONGC, was looking at acquiring 40 per cent stake in the Venezuelan oil field. The initial proposal was to acquire 30 per cent stake, which was increased to 40 per cent. Indications are that the ECS has proposed something between 30-40 per cent.

An OVL team is in Venezuela to negotiate the deal and reach an agreement. Venezuelan national oil company Petroleos de Venezuela (PDVSA) will hold the remaining stake (60 per cent) through a subsidiary, sources said. Official sources, however, declined to reveal OVL’s total investment and the signature bonus to acquire the stake.

Currently, ONGC extends loans to OVL for the projects. Indications are that ONGC may be required to sanction a loan of close to $355 million for the project.

Oil production from San Cristobal field started in October 1981. The field is currently producing about 24,000 barrels of oil per day, with ultimate recoverable reserves in the project area estimated by a joint team of ONGC and PDVSA at 232.38 million barrels that can yield up to 1 lakh barrels of oil per day. According to sources, OVL and the PDVSA subsidiary will form a joint venture company to operate the San Cristobal project. Venezuela is the only OPEC member from Latin America and is one of the top four oil producing countries in the world. It has 87.04 billion barrels of proven oil reserves.

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