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OVL to take stake in Venezuelan field

NEW DELHI: Oil and Natural Gas Corporation Videsh Limited (OVL), the overseas investment arm of State-run Oil and Natural Gas Corporation (ONGC), is all set to take a 40 per cent stake in San Cristobal oil field in Venezuela.

OVL will make a total investment of $355.738 million comprising signature bonus of $173.1 million for the stake, according to official sources here. Venezuelan national oil company, Petroleos de Venezuela (PDVSA), will hold the remaining 60 per cent through a subsidiary.

ONGC will also be required to give a loan of $355.74 million for the project that covers 160.16 sq. km, located in the Orinoco heavy oil belt. Production from the San Cristobal field was started in October 1981. Till date, 44 wells have been drilled, of which 24 are active. The field is now producing about 24,000 barrels of oil daily. A joint team of ONGC and PDVSA estimated the recoverable reserves in the project area at 232.38 million barrels that can yield up to one lakh barrels of oil daily.

Sources said that OVL and the PDVSA subsidiary would form a joint venture company to operate the San Cristobal project. The Indian firm would have two directors on the board of the joint venture company, while PDVSA subsidiary would have three directors, including the chairman. Capital expenditure, as per the business plan mutually agreed by OVL and PDVSA, would be $446.13 million. Venezuela, the only OPEC member from Latin America, is one of the top four oil producing countries in the world. It has 87.04 billion barrels of proven oil reserves, largest in the western hemisphere. Sources said OVL would also look at the possibilities of shipping its share of oil from San Cristobal to India. India’s oil imports were rising and Venezuela wanted to become one of the chief suppliers of oil to the country, sources said.

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