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OVL to invest $1.45 b in Iraq

NEW DELHI: ONGC Videsh Ltd. (OVL), the overseas arm of Oil and Natural Gas Corporation (ONGC), has executed the exploration and production contract for an oil block in Iraq entailing an investment of $1.45 billion.

The oil block was awarded to OVL by the erstwhile Saddam Hussein regime.

“All the formalities have been almost completed for the Block 8 contract and the agreement is likely to be signed during the next couple of months,” official sources said here. Block-8, located in the western desert in southern Iraq bordering Saudi Arabia, was awarded to OVL in November 2000 by the then Saddam Hussein government. However, the new government, formed after the U.S. invasion of the oil-rich country, sought re-negotiation of the contract which has now been concluded.

The block already has a discovery and is estimated to hold 645 million barrels of in-place reserves, of which 54 million are recoverable. OVL has committed investing $86 million in two phases of exploration and $1.45 billion in development of the reserves thereafter. The contract would be a service contract wherein OVL will be paid about 18 per cent rate of return on its investment.

The sources said OVL was also considering bidding for the six producing oilfields Iraq has put on offer in its first licensing auction and could well join hands with international oil companies.

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