Blocks already discovered, work can start: Moily

Iraq, India’s second-largest crude oil supplier, has offered three discovered blocks in the Middle Furat oilfields on a nomination basis to Indian companies, particularly national oil companies. It has also agreed to restart negotiation with ONGC Videsh Ltd on the long-pending contract for its oil block 8.

Giving blocks on a nomination basis would mean offering India access on a preferential basis. In other words, Indian companies will not have to compete with other international players in the bidding rounds to acquire a stake.

The Gulf nation has also shown interest in Indian Oil Corporation’s 15-million-tonne Paradip refinery project in Odisha.

Speaking to newspersons here on Thursday, Petroleum and Natural Gas Minister M. Veerappa Moily said several decisions, across sectors, were taken at the joint commission meeting (JCM) between Iraq and India. In the energy sector, the surprise was the offering of a stake in three blocks, Moily said, adding that “since these are already discovered, work can immediately start.” He, however, did not disclose the volumes that these blocks will produce.

Oil block 8

The Iraqi side has also agreed to immediately re-initiate negotiations with ONGC Videsh to finalise the contract for oil block 8, which has been pending for almost a decade, he said.

ONGC Videsh is the sole licensee of block-8, a large on-land exploration block in Western Desert, Iraq. The exploration and development contract for the block was signed in 2000, by Saddam Hussein’s regime. The contract was ratified by the Iraqi Government on April 22, 2001, and was effective from May 15, 2001. However, a force majeure situation was notified in April 2003 due to the conditions prevailing in Iraq at the time.

In 2008, Iraq decided to re-negotiate the contract in line with the provisions of its new oil and gas law, which is yet to be promulgated. ONGC Videsh had invested about $2 million in the project till last March. The discovered block is estimated to hold 645 million barrels of in-place reserves, of which 54 million are recoverable.

Crude supplies

Iraq has also committed to meet India’s long-term crude oil requirements and was open to consider more favourable commercial terms, including extending the interest-free credit period from 30 to 60 days.

In 2012-13 (provisional), imports from Iraq stood at 24.04 million tonnes, accounting for about 13 per cent of India’s total crude oil imports of 186.3 million tonnes.

(This article was published on July 11, 2013)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.