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Reliance Industries has dropped out of the grand alliance with Oil and Natural Gas Corporation and Indian Oil Corporation in jointly bidding for $16-18 billion oilfield in Venezuela.
"Reliance has communicated to us that it is no longer interested in the project," a top ONGC official said.
ONGC Videsh Ltd, the overseas arm of the state explorer, Reliance, IOC and Oil India Ltd had in April this year come together to consider jointly bidding for a 40 per cent stake in a field in the vast Orinoco heavy crude oil belt.
"Venezuela has delayed bidding for the project and this could be one of the reasons why Reliance has lost interest," he said, adding that Reliance has given no no official reason.
To make up for the loss of Reliance, OVL has opened talks with global energy firms and is even willing to take a smaller role in case a major company joins the consortium.
OVL is keen on getting at least one of the three massive fields in the Carabobo region of the Orinoco belt that Venezuela may put on offer. Venezuelan state-run Petroleos de Venezuela SA will retain the remaining 60 per cent.
IOC was to take 2.5-5 per cent interest while OIL was assigned a 2.5 per cent stake. The remaining 32.5-35 per cent was to be split almost equally between OVL and Reliance. OVL is willing to settle for a smaller stake in case a global energy major joins, the official said.
Each of the three fields on offer can produce 2,00,000 to 4,00,000 barrels of oil per day (10-20 million tonnes a year).
The official said the fields would produce tar-like oil, which would need to be upgraded to higher-quality synthetic crude.
"The investment required is massive. The crude upgrade facility alone will cost $6-8 billion and so we are looking at partnership with other companies," he said.
The projects offer low production costs and limited exploratory risks.
"Venezuela requires bidders to indicate where they intend to use the oil. Earlier, it was planned to ship the oil to Reliance Industries' twin refineries at Jamnagar in Gujarat (on the west coast) and IOC's proposed Paradip refinery in Orissa (on the east coast)," the official said, adding that the new partner may also use some of the oil produced.
The under-construction Paradip refinery will be ready by 2012, much before oil would begin to flow from the Venezuelan fields.
Companies ranging from US giant Chevron to China National Petroleum Corporation have been evaluating the offer.
Since last year, OVL has been seeking a stake in one of the four oilfields in the Carabobo and a piece in the Junin Norte Block in the Orinoco heavy-oil basin.
It already has a 40 per cent stake in the 40,000 barrels per day San Cristobal oilfield in Venezuela.
Venezuela has carved out seven heavy oil Carabobo blocks in the Orinoco belt. Venezuela's government says the area contains 272 billion barrels of recoverable reserves. About 10 to 20 per cent of these reserves can be recovered.
The tar-like Orinoco oil would then be turned into lighter synthetic crude through multibillion dollar upgraders.
Under the rules of the Carabobo field licensing round, foreign partners are required to plan and finance the oil pumping and processing of heavy oil, while retaining a minority stake in the venture.