After bagging two shallow water gas blocks in Bangladesh, ONGC Videsh has said it was open to investing in power, petrochemical and fertiliser plants in that country,
reports Indian newspaper the Business Standard.
For the foreign investment arm of state-run ONGC this will be a foray into a neighbouring country.
OVL has won the two blocks along with Oil India. The two Indian government-owned companies would develop the blocks in a joint venture with Bangladesh. OVL will also take part in the bidding round for oil and gas blocks in Sri Lanka, DK Sarraf, managing direct and chief executive officer of OVL, told Business Standard. He confirmed the winning bid for Bangladesh.
Bangladesh does not allow export of natural gas, which is the reason for global majors opting out of the bidding race. ‘ Right now, we are at the exploration stage but we can look at setting up of power, petrochemical and fertiliser plants but that will depend on how much gas we get and the economics of it. Bangladesh government’s priority is supply to power plants because they have acute power shortage,’ Sarraf said.
Except ONGC and ConocoPhillips, all global majors keen during the pre-bidding stage had backed out of the bidding, citing lack of incentives to cover the offshore investment risks. Of the nine shallow-water blocks up for auctions, ONGC and Conoco Philips went for only three blocks. When ONGC grabbed SS-04 and SS-09, ConocoPhillips got SS-07.
A production sharing contract for the blocks would be signed by August. Sarraf denied that the company was under pressure from the Indian government to make the acquisition. ‘We bid on commercial basis but we do keep in mind India’s energy security,’ he said.
‘ONGC will not have to pay any signature bonus or royalty for these blocks. The only major criterion was that the operator needed an experience on offshore production with 15,000 barrels of oil or 150 mmscf of gas,’ the official added. According to reports, ONGC has offered to spend $98 million in both the block.
Apart from this, OVL would also own the right to explore Bangladesh’s first offshore gas field Kutubdia, as it comes under SS-04 block. ‘We have some old data regarding Kutubdia. Hence, the Bangladesh company would hold a special additional profit of 5 per cent for it,’ he said.
-With New Age input
