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A consortium of three Indian companies along with Spain’s Repsol and Malaysia’s Petroliam Nasional Berhad (Petronas) emerged successful bidders of a huge oil asset -- Carabobo -1 block in Venezuela’s Orinoco belt.
OVL, Repsol and Petronas will have 11 per cent each interest in the asset. IOC and OIL will together hold seven per cent in the prolific energy block. Petroleos de Venezuela will retain controlling stake of 60 per cent.
The consortium partners have estimated an initial investment of about $ 9 billion. Indian players will have to fork out close to $ 2 billion initially.
Later, these companies may have to increase their investments to $ 4 billion as total spending over next 25 years is estimated at $19 billion.
The multi-national consortium will have to pay $1.05 billion to Venezuela government towards signing up the oil well’s ownership and exploration. Seven blocks in the Carabobo area, with combined oil in place, is estimated at around 128 billion barrels. The blocks are divided into three projects.
ONGC, which accounts for close to 75 per cent of crude production in the country, rose 4.6 per cent on the Bombay Stock Exchange (BSE) during the early trade on Thursday after the announcement.
Upward movement of the scrip to this extent was seen after two month, since November 23. The stock closed 1.14 per cent higher at Rs 1,100.20. But, IOC scrip ended lower by 0.79 per cent at Rs 313.50 on BSE. Similarly, OIL scrip closed at Rs 1,162.50, down 0.27 per cent.
The companies will build heavy oil production facilities; upgrade existing factories and associated infrastructure in the Latin American nation. The upstream production facilities are expected to produce around 400,000 barrels per day of extra heavy oil. Of this, about 200,000 barrels will be upgraded into light crude oil. The licence term will be for 25 years with an option to extend by another 15 years.
“The good news from Carabobo will surely boost our continued efforts in building a bountiful portfolio of oil assets. It has given us opportunity to develop massive oil resources stored in one of the world’s richest oil regions,” said Sarthak Behuria, chairman of IOC. Increasingly, utilisation of heavy oil is seen as the key to future exploration and development. And, it will go a long way in establishing IOC as E&P player,” he added.
The deal will help Indian companies to gain technological advantage while processing heavy oil, said Deepak Pareekh, an analyst with Mumbai-based Angel Broking. Repsol, partner in the consortium, has high technological know-how. OIL will be most benefited as it also holds heavy oil reserves in Rajasthan that it is trying to process for several years, Pareekh added.
The ONGC has to implement the project properly before it gets built into the stock price, Vinay Nair, analyst at Khandwala Securities told Bloomberg. “It’s a heavy oil field and producing it will be difficult and expensive.” OVL is making aggressive moves to acquire energy assets across the globe. It took over Imperial Energy for $2.2 billion last year, which gave OVL access to Russia.
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