Increase in oil recovery boosts OVL's Sudanese field earnings

Nov 10, 2004 01:00 AM

An increase in oil recovery from 2,70,000 bpd to 3,27,000 bpd coupled with a rise in global crude oil prices has resulted in a dramatic rise in ONGC Videsh Ltd.'s (OVL) earnings from the Sudan oil field.
As against its earlier estimation of recovering the entire investment of $ 600 mm by the end of next year, the company is now set to recover the same latest by April-May 2005.

OVL holds 25 % stake in the Greater Nile Oil Project (GNOP) in Sudan along with China National Petroleum Corporation (40 %); Petronas Carigali Overseas of Malaysia (30 %); and Sudan National Oil Company (5 %). The project, located at the Muglad basin, is estimated to have a reserve of more than 1 bn barrels spread over10 fields.
OVL participated in the consortium in March 2003 at an estimated plateau rate of production of 2,70,000 bpd at a time when oil price was $ 33 per barrel.

According to sources, the consortium was successful in enhancing the oil recovery to the level of 3,27,000 bpd. It has also decided tomaintain the enhanced level of production as plateau rate.
Stating that the development had enhanced the return on investment dramatically for OVL, sources said the company would recover the entire investment in less than six months from now.

OVL participated in the project at a time when Canadian oil major Talisman made an exit. The project was also the first to offer equity-crude to the Indian oil major. Apart from GNOP, OVL was also negotiating for a $ 1 bn turnkey contract for modernisation and revamping of a refinery in Sudan. The present capacity of the refinery is 3 mm tons. OVL has proposed to carry out the order on its own.
The company has already won a project for construction of a gas pipeline in the country.

Source: The Hindu Business Line
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