Vietnam offers 6 oil and gas blocks to OVL

Vietnam has offered to give ONGC Videsh Ltd five offshore oil and gas exploration areas in South China Sea and its Kossor block in Uzbekistan without bidding, the Indian company said today.

The five blocks offered on nomination basis lie outside the territory claimed by China in the South China Sea.

Vietnam's national oil company PetroVietnam offered Block 17, 41 and 43 while PetroVietnam Exploration Corporation offered blocks 10&11-1 and 102&106/10 and the Kossor block it has in Uzbekistan as Hanoi looks to counter China's influence in the region.

OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), in a statement said, it yesterday signed a memorandum of understanding with PetroVietnam for joint cooperation in hydrocarbon sector in Vietnam, India and other countries.

"Under the MOU, PetroVietnam has offered 5 blocks (in Vietnam) to ONGC Videsh. ONGC Videsh would assess these blocks and if these are of interest, it would make a proposal to PetroVietnam," it said.

"OVL will study the data on the blocks and has the option to pick and choose from the blocks. It can even take all of them and also has to option not to take any of them," a top official said.

If OVL decides to take any or all of the blocks, a Production Sharing Contract (PSC) will be signed.

OVL will carry out evaluation of blocks 17, 41 and 43 on an exclusive basis in next three months. "In the event any block is of interest to OVL, it shall provide PetroVietnam with its proposal for entering into a PSC for such block(s) and to negotiate PSC agreements under the Petroleum Law of Vietnam," he said.

For block 10&11-1 and 102&106/10 and Kossor block in Uzbekistan, OVL shall carry out the evaluation and discuss with PetroVietnam Exploration Corp on terms and conditions for contract farm-in.

Hanoi made the offer during delegation level talks with visiting Vietnamese Communist Party general secretary Nguyen Phu Trong yesterday.

OVL already has stake in a gas production block on the southern Vietnamese coast. It also had interest in two exploration blocks - 127 and 128 in the South China Sea, an area which China claims being part of its East Sea.

OVL, however, relinquished Block 127 in offshore Phu Khanh Basin after it failed to find any oil or gas in the area. It plans to withdraw from adjacent Block 128 which is under extended exploration phase-1 until June 15, 2014.

China claims sovereignty over most of the South China sea where Block 127 and 128 are located and had warned the Indian arm from drilling in the region.

OVL continues to own 45 per cent in Vietnam's offshore block 6.1. OVL's share of production from the fields was 2.1 billion cubic metres and the company had till date invested USD 415 million.

"Vietnam is one of the focus countries for ONGC Videsh where it would like to acquire stakes in oil and gas assets depending on techno-commercial viability," the statement said.

OVL is present in Vietnam since 1988 when exploration license for Block 6.1 was acquired. The current non-operating participating interest of OVL in the block is 45 per cent which consists of Lan Tay and Lan Do fields.

It holds 100 per cent operating stake in exploration Block-128 with cumulative investment of more than USD 50 million. "Earlier, OVL also held 100 per cent operating stake in exploration Block-127 and invested about USD 51 million," the statement added.