ONGC Videsh secures contract extension for Vietnam oil blocks
New Delhi: India’s flagship overseas oil firm ONGC Videsh Ltd has secured a 16-year contract extension for producing oil and gas in Vietnam, alongside getting three more years to explore a separate block in the contested waters of the South China Sea, officials said.
Vietnamese authorities have extended the production sharing contract (PSC) for the producing Block 06.1 in the offshore Nam Con Son basin till 2039.
They have also granted an eighth extension for exploring for oil and gas in Block 128 in the South China Sea, according to officials.
OVL, the overseas investment arm of state-owned Oil and Natural Gas Corporation (ONGC), holds a 45 per cent stake in Block 06.1, an offshore block located in Vietnam’s Nam Con Son Basin. Acquired in 1988, the block has Zarubezhneft EP BV as the operator with 35 per cent interest and PetroVietnam holding the remaining 20 per cent.
The block, which produces about 1 million tonnes of oil and oil equivalent gas, recently got a 16-year extension of the production sharing contract effective from May 19, 2023.
For Block 128, the seventh extension to explore for oil and gas was till June 15, 2023, and OVL had sought a three-year extension, officials said, adding that Vietnamese regulator PVN has extended the license till June 15, 2026.
The company has so far not found any commercially recoverable oil and gas reserves in the block for the last 18 years it has been exploring, but has continued presence there because of India’s strategic interest in the South China Sea.
Vietnam too wants the Indian firm to counter China’s interventions in the contested waters.
OVL had signed a production sharing contract with Vietnam’s national oil firm PetroVietnam for deepwater exploratory Block-128, having an area of 7,058 square kilometres in Offshore Phu Khanh Basin, Vietnam, in May 2006.
An investment licence was issued to it on June 16, 2006, thereby giving effect to the PSC.
The firm has completed the licence requirement of shooting 3D seismic data and reprocessing of 2D seismic data as well as drilling of the committed one well. Officials said OVL acquired 3D seismic data and reprocessed 2D seismic data to fulfil a part of the minimum work programme of the phase-1 of exploration period. Also, petroleum system modelling studies have been carried out based on data provided by PetroVietnam. To further assess the prospectivity of the block and mitigate potential risks, the company has now sought seismic data in the eastern and western regions of the block from PVN.
The block lies in the part of the South China Sea over which China claims sovereignty. In 2011, Beijing had warned OVL that its exploration activities off the Vietnam coast were illegal and violated China’s sovereignty, but the company continued exploring for oil and gas.
OVL made a foray into Vietnam as early as 1988 when it bagged the exploration licence for Block 06.1. OVL’s share of condensate and oil equivalent gas production from the block was 0.421 million tonnes during the 2023-24 fiscal.
