ONGC, Kazakh oil field agreement delayed

India was hoping that ONGC Videsh Ltd, the overseas arm of the state-run firm, will be able to ink the Exploration and Production Contract (EPC) for the Caspian Sea block at the meeting of the India-Kazakhstan Inter-Governmental Commission today but Kazakh side was not ready.

"The agreement is not being signed today," a top official said today.Kazakhstan Oil and Gas Minister Sauat Mynbayev will lead the Caspian nation at the inter-governmental talks while the Indian side will be led by Petroleum Minister Murli Deora at the day long talks.

OVL is to invest about USD 400 million in the prospective Satpayev oilfield in the Caspian Sea.Satpayev is situated in highly prospective region of North Caspian Sea and is  in proximity to at least four fields.

A peak output of 287,000 barrels per day (14.3 million tonnes a year) is envisaged from the 256 million tonnes of reserves in the field.

Kazakh national oil firm KazMunaiGas will be the operator of the field, holding remaining 75 per cent stake.The official said initial agreement for OVL and its partner Mittal Investment Sarl (holding firm of steel magnate Lakhsmi Mittal) getting 25 per cent stake in the Satpayev was signed during Kazakhstan President Nursultan Nazarbayev's state visit in January 2009 and a EPC has been under discussion since then.

But in November 2009, Mittal pulled out of the project and OVL decided to take the entire 25 per cent stake on its own.

He said OVL will pay USD 26 million as signing amount to the Kazakhstan government.
Besides, it will also pay USD 80 million as one-time assignment fee.On top of this, OVL has committed a minimum exploration investment of USD 165 million and an additional optional expenditure of USD 235 million.

The 1,582 sq km Satpayev block, situated in the Pre- Caspian Basin of Kazakhstan, holds 1.75 billion barrel of inplace oil reserves.It lies in proximity to major fields like Karazhanbas, Kalamkas, Kashagan and Donga, where significant amounts of oil has been discovered.

The Satpayev field was originally identified for OVL  but for allocated in 2007 to ONGC-Mittal Energy Ltd - the equal joint venture of OVL and Mittal Investment.
But just when the EPC deliberations were being concluded, Mittal pulled out of the project.