India’s leading overseas oil company ONGC Videsh has been roped in by Oil India Ltd to replace a reluctant IndianOil (IOC) for a possible acquisition of 50 per cent stake in Tullow Oil Plc’s USD 3.4 billion oilfield project in Kenya, according to people in the know. A new partner has been found. of the case. But the OVL-OIL duo now faces competition from hyper-aggressive Chinese energy giant Sinopec, which has entered the fray taking advantage of the Indian side’s delay in finalizing the deal.
Originally, ONGC Videsh, the overseas arm of state-owned Oil and Natural Gas Corporation (ONGC), was interested in buying half of Tullow, Africa Oil Corp and Total Energy SE’s stake in the Loichar oil field in Kenya. Sources said the board of OVL had approved the deal, but the company wanted to bring on board IOC, which had also shown interest in the project. For months, OVL-IOC negotiated a stake in the project. But the transaction could not be completed as the IOC began to reconsider, possibly due to financial strain due to losses on fuel sales.
Sources said when the Kenyan ministerial delegation visited the India Energy Week in Bengaluru in February, the Indian side informed that IOC would not go ahead and instead state-owned Oil India Limited (OIL) would be involved. However, a delay of months led to the Chinese sensing an opportunity. He said China Petroleum and Chemical Corporation (Sinopec) is now sending fillers to Tullo and the other two partners in the project.
Tullo, headed by Indian-origin CEO Rahul Dheer, originally supported the Indian association as a Kenyan project and had many similarities to the Barmer areas of Rajasthan. Sources said 70 per cent of the supply chain could be done from India and Dhir, who brought Rajasthan’s farms into production more than a decade ago as CEO of Cairn India Ltd, saw great synergy. However, Chinese interests may skew the party as Beijing wields considerable influence over the African nation.
The deal being negotiated by OVL-OIL would have made the Indian state-backed firms joint operators of the venture. Tullow is the current operator of the venture with a 50 percent stake. Africa Oil Corp and Total Energy SE each hold a 25 percent stake. All three were selling half their stake to Indians. OVL, which has operations in 35 oil and gas assets in 15 countries, will lead the venture backed by OIL, the country’s second largest state oil explorer.
Blocks 10BB and 13T are expected to produce 120,000 barrels of oil per day (6 million tonnes per year) in Kenya’s South Lokichar fields, with an estimated gross oil recoverable of 585 million barrels over the field’s total lifetime. Waxy crude from the project, which is similar to that produced from Barmer in Rajasthan, will be shipped from the fields through a 20-inch, 825-kilometer heated pipeline to a port in the archipelago of Lamu.
Barmer’s crude oil is also transported through a 700 kilometer hot pipeline from the desert of Barmer to the Gujarat coast. Indian refiners on the west coast would have been ideal customers for Kenyan crude, sources said, adding that it would take three years for companies to start producing oil from the date the investment decision was made. The USD 3.4 billion investment involves developing the South Ethos fields and connecting them to Kenya’s Indian Ocean port of Lamu through a heated pipeline.
Read this also | Sensex and Nifty recover from early losses; NTPC, Wipro in the lead
Read this also | Jewelers are getting more inquiries for gold after RBI withdraws Rs 2,000 note. Here are the complete details