Sudan's pipeline, refinery projects to fetch India more oil

Friday, 24 October 2003, 07:00 Hrs
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NEW DELHI: India has bagged two important contracts in Sudan -- for setting up a 714 km petroleum pipeline and renovation of a refinery -- that will fetch more oil for the country.

The country is already getting three million tonnes of crude from Sudan with state-owned ONGC Videsh Ltd (OVL), the overseas arm of Oil and Natural Gas Corporation (ONGC), having acquired 25 percent stake in a producing field.

All the crude received from Sudan is, however, not being brought to India, which sees it as a secure source. India is dependent on imports for 70 percent of its requirements.

The new contracts have been given to India on a nomination basis, ONGC Videsh officials said.

A consortium of companies headed by ONGC Videsh would be undertaking the construction of the pipeline from Khartoum Refinery to the Port of Sudan at an estimated cost of $250 million.

In addition, $750 million will be invested by India in the renovation and modernisation of Sudan's state-owned refinery.

"Though an announcement of the two contracts have been made during President A.P.J. Abdul Kalam's visit, the finalisation of the nitty-gritty and some technical aspects are still awaited," a senior ONGC official told IANS.

The final contract, including repayment of the Indian investment in oil and cash, is to be finalised over the weekend, the official said.

ONGC Videsh Ltd (OVL) managing director Atul Chandra had earlier said that for the first pipeline service provider contract the company has bagged in Sudan "we plan to undertake the project as a consortium with ONGC and OVL as lead partners with 50 percent equity".

The other partners are expected to be Engineers India Ltd (EIL) with 20 percent stake and both Indian Oil Corporation (IndianOil) and Oil India Ltd (OIL) holding 15 percent stakes each.

The project is to be completed by early 2005, and India expects to begin receiving oil and cash returns after one year of the product pipeline becoming operational.

India is hopeful of getting one million tonnes of oil annually over a number of years as returns on the Sudan investment.

Last month OVL bought over the equity stake of Austria's OMV Aktiengesellschaft in two onshore exploration blocks in Sudan in a $115 million deal.

The exploration blocks 5A & 5B in which OMV Aktiengesellschaft has 26.12 percent and 24.5 percent stakes respectively are located in the Muglad basin. They are adjacent to the Greater Nile Oil Project, where OVL acquired 25 percent stake in March this year from Canada's Talisman Energy Inc.

In block 5A, OVL will be partnering Malaysian national oil company Petronas and Sudanese national oil company Sudapet. In exploration block 5B, OVL partners Petronas and the Swedish oil company Lundin Petroleum AB along with other partners.

Currently drilling of the exploratory well TharJath-3 is in progress in block 5A.

The wholly owned subsidiary of ONGC is looking at building up its investment in Sudan to yield around eight million tonnes of oil annually, up from an estimated 3.2 million tonnes currently.

"As against 3.2 million tonnes we are receiving as our share from the Greater Nile Project, we expect to get around 3.75 million tonnes next year as the production is stepped up," Chandra had stated.

Chandra is currently in Sudan to finalise the contracts for the pipeline and refinery projects.

OVL currently has 10 exploration blocks in eight countries, including the Sakhalin-I project in Russia, the Vietnam Block 06.1 field, the Greater Nile Oil Project in Sudan as well as exploration blocks in Iran, Syria, Libya and Myanmar.

Source: IANS
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