Fri 31 Aug 2007
Filed under: Business / Trade,News
Indian has another opportunity of bagging three deepwater hydrocarbon blocks in eastern neighbourhood, Myanmar. ONGC Videsh (OVL) is considering to pick up stakes in three Rakhine offshore deepwater blocks: AD-2, AD-3 and AD-9. OVL, along with Gail, already has 30% interest in two gas producing blocks A1 and A3 in Myanmar.
There has been discovery of large natural gas reserves the two offshore blocks, which has put the region in the global hydrocarbon map.
Interests in some of the AD-series blocks have been already acquired by international firms. China National Petroleum Corporation (CNPC) has interests in the AD-1, AD-6 and AD-8 deepwater blocks which it won in January 2007. Another block AD-7 was bagged by Daewoo.
The investments made by OVL-Gail combine in A1 and A3 blocks are also yielding good results. It is stated that Indian companies would make an investment of $540 million in the two gas assets to get a return of around $2.5 billion. The estimated recoverable reserve in these two blocks are about 4.8 trillion cubic feet (tcf). While Gail holds 10% participating interest in each blocks, 20% interests in each are held by OVL. Investment and recovery periods are estimated to be around 20 years.
Gail had also taken a 30% participating interest in off-shore block A-7 in Myanmar with Silver Wave Energy, which had balance interest of 70% in the block. In July 2007, Gail decided to exit from the project after having studied its prospect. â€œStudies indicated that the prospect of A-7 was not very good,â€ an official said. Gail had signed the production sharing contract (PSC) with Silver Wave in December 2006.
The PSC was signed with the condition that the relevant date would be analysed and a final decision for continuing in this block would be taken in six months. â€œThe block date was arranged by Silver wave in April 2007 and thereafter, analysed by Gail team. Gail had also taken a third party opinion on the data. Considering poor prospects in the block Gail decided to exit from this block,â€ the official said.
India has a bitter experience with Myanmar as the neighbour preferred China over India while selling gas from A1 and A3 blocks, even as it had committed in 2004 that Gail would be the preferential buyer of the gas. It is said that Myanmar’s decision of selling gas to China through a pipeline is beyond commercial consideration and has been politically motivated.