ONGC Videsh inks pact to acquire stake in two Vietnamese oil blocks

ONGC Videsh (OVL), the overseas arm of state-run Oil and Natural Gas Corp (ONGC), on Wednesday signed an agreement to pick up to 50 per cent stake in two exploration blocks of PetroVietnam 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, Vietnam's national oil company, will take half of OVL's 100 per cent stake in Block 128 in South China Sea which the domestic firm had earlier planned to exit.

"OVL signed a Heads of Agreement (HOA) with PetroVietnam Exploration Production (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 domestic oil firm said in a statement in the national capital.

The HOA was signed by OVL Managing Director Narendra K Verma and PVEP President and CEO Dr Do Van Khanh.

Moreover, state-owned ONGC 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 the oil PSU's Chairman and Managing Director Dinesh K Sarraf and Khanh.

Both the MoU and the HOA were exchanged in the presence of visiting Vietnamese Prime Minister Nguyen Tan Dung and Prime Minister Narendra Modi at Hyderabad House in the national capital.

OVL forayed into Vietnam as early as 1988, when it was awarded the exploration license for Block 06.1, which is presently 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 2013 to the government 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 domestic firm had in June 2012 decided to return the block as exploration was not commercially viable but did a volte-face at the insistence of the Ministry of External Affairs, which wanted the country to continue its presence in South China Sea.