New Delhi: Oil and Natural Gas Corporation (ONGC) plans to pursue exploration and production activities in the South China Sea despite Chinese opposition, CMD Sudhir Vasudeva said. Chinese officials and media have recently voiced protests against ONGC’s plan to develop oil blocks in the South China Sea allocated to it by Vietnam.
“The South China Sea issue is blown out of proportion. We have been producing and selling natural gas from two blocks — LanTay and LanDo — in the region for the last 30 years,” Vasudeva said.
BP and Petro-Vietnam are ONGC’s partners in the blocks. India has so far downplayed the issue, stating its exploration projects in Vietnamese waters do not violate international law, and that China\’s opposition has no legal basis. Last month, India and Vietnam signed a three-year deal seeking mutual investments and cooperation in energy exploration, production and refining.
ONGC also plans to invest more in Rajasthan’s Barmer oilfields operated by partner Cairn India, with which it had a royalty dispute until recently, Vasudeva told FE.
According to Cairn, Barmer output can be increased by 37% to 2.40 lakh barrels of oil per day, for which the company needs the consent of its 30% joint venture partner ONGC, besides fresh investments and regulatory clearance. ONGC was believed to be not in favour of investing more because until recently it was bearing the full burden of royalty payable to the state government, although it enjoyed only a 30% share in profits, making fresh investments unwise.
The companies recently resolved the issue with Cairn agreeing to make royalty a recoverable cost as suggested by the government while clearing Cairn India’s majority stake sale to UK-listed Vedanta Resources.
Vasudeva said ONGC will make use of all opportunities that support its vision of doubling its oil and gas reserves to 6 billion tonne of oil and oil-equivalent gas. Reserves indicate the oil or gas that geology and technology allow to be extracted out of a much larger deposit called ‘in-place oil or gas.’
Vasudeva, however, said it was incorrect to assume that ONGC was ever against making fresh investments in the Cairn-operated asset. “It is a perception issue. We have never been against making investments in Cairn’s Rajasthan project. We have committed as well as invested in the project even when our net present value (NPV) of the project was negative,” Vasudeva said, adding that ONGC brought about $1 billion out of the $4 billion that was invested in the project.
- South China sea: ONGC will continue exploration work, India tells Vietnam (Economic Times) (thuytinhvo.wordpress.com)
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- India, China in Standoff Over South China Sea Oil (Wall Street Jounal) (thuytinhvo.wordpress.com)
- India, Vietnam Set to Go Ahead with South China Sea (2point6billion)JV ( (thuytinhvo.wordpress.com)
- Vietnam, India Stand Firm on China Row (Wall Street Jounal) (thuytinhvo.wordpress.com)
- India’s involvement complicates S. China Sea dispute (China) (thuytinhvo.wordpress.com)