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ONGC seeks $228 mn for Vietnam venture

State-run Oil and Natural Gas Corp has sought central approval to spend $228 million for developing a gas field in Vietnam, in which its foreign arm, ONGC Videsh Ltd, has a 45 per cent participating-interest.

ONGC's adviser, SBI Caps, has advised the exploration and production firm to raise funds through foreign currency loans from banks based in India under a scheme called foreign currency non-resident (FCNR-B), a petroleum ministry official said.

It has suggested the loan be converted into a rupee borrowing at the exchange rate on March 31, 2004, the date when ONGC should start repayment in 25 equal quarterly instalments ending March 2010, said the official who did not want to be identified.

"ONGC Videsh has the approval of the Reserve Bank of India, but it needs the approval of the Cabinet Committee on Economic Affairs to make this investment," the official said.

ONGC Videsh had signed a production-sharing contract with Petro Vietnam, the national oil company of Vietnam, in May 1998.

ONGC initially held a 55 per cent interest in the venture, but later assigned another 10 per cent to Petro Vietnam, reducing its own share to 45 per cent. Its other partner is BP Amoco.

It is developing an offshore gas field in Vietnam with estimated reserves of 2.04 trillion cubic feet.

The official said contracts for the first phase of development work had already been awarded and the offshore platform would be commissioned by June next year. "Now ONGC has to quickly arrange for its share of the project cost."

ONGC Videsh, a wholly owned subsidiary of ONGC, is engaged in acquiring equity oil abroad to augment depleting domestic reserves.

It recently acquired an interest in Sakhalin 1 field in Russia, where production is expected to start in 2005. It will spend $1.7 billion on this project.

ONGC produced about 25 million tonnes of crude oil last year. India's crude output has declined to about 30 million tonnes a year from 34 million six years ago, forcing the country to import about 70 per cent of its oil needs.

To augment India's equity oil, the government is seeking private investment in exploration in India and encouraging ONGC Videsh to acquire interests abroad.

The company has an exploration agreement in Iraq and memorandums of understanding with Indonesia's Pertamina and the national oil companies of Venezuela and Algeria.

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