ONGC is eyeing a producing field in OPEC member Nigeria for up to $2 billion as it prepares to expand its international portfolio.
NEW DELHI: Oil & Natural Gas Corp is eyeing a producing field in OPEC member Nigeria for up to $2 billion as it prepares to expand its international portfolio after striking a $5-billion deal in Kazakhstan in November.
The state-run company's overseas arm, ONGC Videsh Ltd, has signed a confidentiality agreement for the possible acquisition of 25-30% stake in four blocks in Nigeria from Sterling Energy and Exploration Production Company (SEEPCO), a privately held Indian firm that operates the blocks. "Due diligence is on. The value of the deal can be up to $2 billion," a source involved in the negotiations told ET.
ONGC, which is aggressively seeking stakes in foreign petroleum assets to boost India's energy security, already produces nearly 9 million tonnes of oil and gas a year from foreign fields. Last November, it struck a $5-billion deal to buy a stake in Kazakhstan's Kashagan oilfield from ConocoPhillips. The field, the world's biggest discovery since 1968, holds about 30 billion barrels of oil.
The government is backing ONGC's efforts to boost energy security of the country, which imports 80% of the crude oil it processes.
ONGC is targeting a six-fold increase in production from overseas fields in the next two decades - from about 9 million tonnes oil equivalent (MTOE) to 60 MTOE per annum by 2030. Its overseas production has recorded a compound annual growth rate of 10.75% in the past eight years.
Sources close to SEEPCO, which is owned by Mumbai-based Sandesara Group, said the conglomerate has proven reserves of 280 million barrels of oil and has the potential to discover another 2 billion barrels of oil and 2 trillion cubic feet of gas from four Nigerian blocks in which ONGC may buy a stake. The blocks are OPL 277, OPL 280, OPL 2005 and OPL 2006 in the Niger Delta.
The Sandesara Group, better known for its listed arms Sterling International Enterprises andSterling Biotech, aims to raise oil production in Nigeria from the current 10,000 barrels per day to 25,000 bpd in a year. Currently, it supplies Nigerian crude oil to mining and trading major Glencore and plans to sell future output to Indian companies. The group has been looking for a strategic partner to ramp up crude production to 100,000 bpd.
Group Chairman Nitin Sandesara could not be reached for comments while ONGC did not respond to emailed queries. A director in ONGC Videsh said the company would not comment on any negotiations prior to a deal.
OVL has already partnered in two offshore blocks in Nigeria. It is now exploring the possibility to participate in Sandesaras' blocks located in the Niger Delta.
In 2005, SEEPCO won a reconnaissance licence for OPL 277 in Nigeria, where it has deployed team of 1,500 people. It is in the process of strengthening its oil services such as drilling, shipping, oil chemical manufacturing and seismic surveys. Earlier, Sandesaras had initiated discussions with Oil Indiato hive off stake.