You are using an older browser version. Please use a supported version for the best MSN experience.

ONGC Videsh to continue exploration in Vietnam oil block

LiveMint logoLiveMint 02-06-2014 Utpal Bhaskar

New Delhi: In a move that will strengthen Vietnam’s case in its dispute with China over the South China Sea, India’s state-owned ONGC Videsh Ltd (OVL) plans to continue exploration in its oil block there.

The field is the South China Sea hydrocarbon block No.128 and OVL’s inclination for renewal is being seen as India’s attempt to assert its presence in the region. OVL had earlier agreed to continue exploring the block for two years after China had put it up for global bidding. This extension ends in June.

It also comes at a time when the Narendra Modi-led National Democratic Alliance (NDA) government, which has come to power, has promised to reboot the country’s foreign policy. Chinese foreign minister Wang Yi is expected to visit India on 8 June to meet Prime Minister Modi.

“We want to extend our presence there. While we are willing to extend our stay there, it also depends on the other party as well. Let us see whether we get a one year or two years’ extension,” an OVL executive said, requesting anonymity.

This comes in the backdrop of a Vietnamese fishing boat sinking near the controversial Chinese oil rig around the Paracel Islands on Tuesday. China, which disputes sovereignty over the waters with Vietnam, had earlier objected to the presence of an Indian vessel surveying the area.

China and Vietnam are among many countries that hold competing claims over the South China Sea and it islands. Tensions have flared between China and Vietnam over the Spratly and Paracel Islands, following clashes between boats of the two nations.

Another OVL executive, who also didn’t want to be identified, confirmed India’s intentions. “We have an unfinished work programme in the block. The government of Vietnam is sharing additional information and data, based on which we will decide where one well has to be drilled,” the second executive said. “The commercial reason behind our decision is that if we exit without drilling the well, we will have to pay. Also, the unsaid reason is one of strategic nature.”

OVL is the overseas arm of state-owned Oil and Natural Gas Corp. Ltd (ONGC) and has a presence in Vietnam through 45% and 100% stakes in blocks 06.1 and 128, respectively. OVL has invested around $46 million in block 128.

Queries to spokespersons for OVL, the Chinese embassy in New Delhi and India’s foreign ministry on 29 May remained unanswered as of press time.

“It was quite clear that the earlier decision was a strategic one. As China was creating a lot of fuss, to have moved out of the block would have created the impression that India was caving in,” said Alka Acharya, director of New Delhi-based Institute of Chinese Studies and editor of China Report. “It needs to be seen how the new government takes this forward.”

“BJP (Bharatiya Janata Party) believes a resurgent India must get its rightful place in the comity of nations and international institutions,” Modi’s party said in its election manifesto. “The vision is to fundamentally reboot and reorient the foreign policy goals, content and process, in a manner that locates India’s global strategic engagement in a new paradigm and on a wider canvass.”

“At the same time, our foreign policy will be based on best national interests. We will create a web of allies to mutually further our interests. We will leverage all our resources and people to play a greater role on the international high table,” the manifesto said.

OVL produced 8.36 million tonnes (mt) of oil and oil equivalent in 2013-14, a 15% increase over the 7.26 mt production in 2012-13. Till now, OVL has invested `78,000 crore in overseas energy assets.

The BJP had also made energy security a part of its poll plank.

“BJP realises the need to focus on generation and distribution of power as a national security issue, so that the growth is not negatively impacted due to supply issues in the energy sector. The overarching goal of energy security is to ensure affordable energy for various consumer segments,” the party said in its electoral manifesto.

More From LiveMint

image beaconimage beaconimage beacon