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Iraq is the common ground for OVL & RIL
SOMA BANERJEE
TIMES NEWS NETWORK[ THURSDAY, DECEMBER 14, 2006 01:44:50 AM]
NEW DELHI: In what may well be a marriage of convenience, arch-rivals Reliance Industries and OVL - adversaries in the new oil hunt - have found common ground in Iraq. The Mukesh Ambani company and ONGC’s overseas investment arm propose to undertake joint exploration and production activities in that country.
The two are also likely to rope in Angolan oil firm Sonatrach to take up exploration of a discovered block - touted to have a production capacity of 150,000 barrels a day - in south Iraq. Although the consortium will get its finishing touches only in the coming days, it is expected that the two oil biggies will have equal stake in the venture. Sources said the new regime in Iraq has called upon companies to register themselves if they are keen on exploration there.
A senior ONGC official said: “We are in discussions with RIL for this collaboration and we hope to expand our collaborations to newer markets.” It is however, left to be seen as how the modalities on operatorship of the block roll out, sources said.
The collaboration is expected to be built on the strengths of the two companies. While OVL will bring in its expertise in acquiring offshore blocks (it has oil equity in 13 countries), RIL’s knack will be its ability to complete large projects cost and time-efficiently. “If
OVL has the strengths of being a state-run company and can build on government support in diplomatic parleys, RIL is already a name in the global oil and gas space, thanks to its refineries,” an analyst said.
Unlike many West Asian countries that bar foreign players from ownership or equity stakes in oil blocks, Iraq has offered a production-
sharing contract to the Indian consortium.
The country’s petroleum law, which was suspended in the last few years, is set to be revived in an amended format by January 2007.
Sources said the oil block is significant as it will signal the revival of Indian operations in oil-rich Iraq. Many Indian refineries used to import Iraq’s Basra Light crude, which is of a superior grade.
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