ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp, on Tuesday signed an agreement to pick up to 50 per cent stake in PetroVietnam’s two exploration blocks in the South China Sea.
OVL will take 40 per cent stake in Block 102/10 and 50 per cent in 106/10 that lie outside the sea territory claimed by China. PetroVietnam, the national oil company of Vietnam, will take half of OVL’s 100 per cent stake in Block 128 in South China Sea which the Indian firm had earlier planned to exit.
“OVL signed a Heads of Agreement (HOA) with PetroVietnam Exploration Production Corp (PVEP), a wholly owned subsidy of Vietnam Oil and Gas Group (PetroVietnam), for mutual cooperation for exploration in Blocks 102/10 & 106/10 of PVEP and Block 128 of OVL in offshore Vietnam, subject to due diligence and negotiations on terms of participation,” the Indian firm said in a statement.
The HOA was signed by OVL managing director Narendra K. Verma and Dr. Do Van Khanh, president and CEO of PVEP. ONGC also signed a Memorandum of Understanding (MoU) with PVEP for “mutual cooperation for exploration in the NELP Blocks of ONGC in Andaman and Cauvery Basins, subject to due diligence and negotiations on terms of participation”.
The MoU was signed by ONGC chairman and managing director Dinesh K. Sarraf and Dr. Khanh. Both the MoU and the HOA were exchanged in presence of visiting Vietnamese Prime Minister Nguyen Tan Dung and Indian Prime Minister Narendra Modi at Hyderabad House in New Delhi.
OVL forayed into Vietnam as early as 1988, when it was awarded the exploration license for Block 06.1. Presently the block is producing natural gas. The company also got exploration Blocks 127 and 128 in 2006. Block 127 was relinquished after completing the work programme. Block 128 is currently under exploration.
The blocks where OVL is picking up stake are from the five that Vietnam had offered in November last year to India to counter growing Chinese influence in the region. OVL offering PetroVietnam equity in Block 128 is to de-risk exploration in the block over which China had claimed territorial rights.
The Indian firm had in June 2012 decided to return the block as exploration there wasn’t commercially viable but did a volte face at the insistence of Ministry of External Affairs, which wanted India to continue its presence in South China Sea.