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| IOC eyes 4% stake in Venezuela oilfield |
| Press Trust of India / New Delhi Apr 30, 2009, 14:12 IST |
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Indian Oil Corporation (IOC) will take just one-tenth of the 40 per cent stake in the grand alliance of Oil and Natural Gas Corporation (ONGC) and Reliance Industries along with the state refiner is eyeing in a vast oilfield in Venezuela. ONGC Videsh, the overseas arm of the state explorer, is talking to Reliance, IOC and Oil India to jointly bid for 40 per cent stake in fields in the vast Orinoco heavy crude oil belt of Venezuela, an official said.
Development of the field will cost $16-18 billion and 40 per cent share worked out to $6.4-7.2 billion. However, Venezuela wants the potential investor to also contribute for the remaining 60 per cent share of its oil firm PdVSA. This amount will be treated as loan and returned from oil sale.
"IOC's finances are in a precarious state and can not take such a huge exposure. Four per cent is all that it can commit," the official said. The company may post first ever net loss in 2008-09 fiscal if it does not get more oil bonds from the government to make up for the losses it incurred on selling fuel below cost.
OIL too is keen only on 2.5 per cent stake but OVL is pressing for both IOC and OIL to take a minimum of 5 per cent each. OVL and RIL would then take 15 per cent a piece. Each of the three to seven fields Venezuela may put on offer can produce 2,00,000 to 4,00,000 barrels per day of oil (10-20 million tonnes a year).
Venezuela is offering 40 per cent stake in massive projects in the Carabobo region of the Orinoco belt that would produce tar-like oil that would need to be upgraded into higher-quality synthetic crude. Its state oil firm Petroleos de Venezuela SA (PdVSA) will retain the remaining 60 per cent.
The Latin American nation has, however, not fixed any bid dates as yet.
"The investment required is massive. A refinery like plant that will upgrade the crude alone will cost $6-8 billion and so OVL was looking at partnership with other companies," the official said.
The projects offer low production costs and limited exploratory risks.
"Venezuela requires bidders to indicate where they intend to use the oil. We plan to ship the oil to Reliance Industries' twin refineries at Jamnagar in Gujarat (on the west coast) and IOC's proposed Paradip refinery in Orissa (on the east coast)," he said.
The under-construction Paradip refinery will be ready by 2011, much before oil would begin to flow from the Venezuelan fields.
Companies ranging from US giant Chevron to China's CNPC have been evaluating the offer. China National Petroleum Corp, the nation's top oil and gas producer and the parent of PetroChina Co (PTR), and China Petrochemical Corp, or Sinopec Group, have already made bids.
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