OVL, India chasing $712 million in dues from foreign governments
In Venezuela, OVL, a subsidiary of ONGC, had in April 2008 acquired 40% stake in the San Cristobal oil project
From Venezuela to Sudan, ONGC Videsh Ltd, India’s flagship overseas oil investment firm, is chasing foreign governments to get its $712 million (overRs.4,700 crore) of dues cleared. While Venezuela owns over $421 million in unpaid dividend on oil from San Cristobal project, Sudan is to pay OVL $192.31 million for oil it bought from its Greater Nile Oil Project and another $98.94 million in unpaid pipeline rent lease, people familiar with the matter said.
In Venezuela, OVL, a subsidiary of state-owned Oil and Natural Gas Corp. Ltd (ONGC), had in April 2008 acquired 40% stake in San Cristobal oil project. Corporación Venezolana del Petróleo (CVP), a unit of state-owned Petróleos de Venezuela SA (PDVSA), owns the remaining stake. With an investment totalling to $408.35 million, OVL’s share of crude oil production from the 160.18 km acreage in the Orinoco Heavy Oil belt was 0.645 million tonnes in 2014-15.
OVL received $56.224 million as dividend on profit made by CVP in 2008 but dividends for 2009 to 2012 totalling to $421.51 million remained unpaid due to cash flow difficulties being faced by PDVSA/CVP. People familiar with the matter said the issue is being pursued at government to government level since last year but so far Venezuela has not indicated when the dues will be cleared.
The slump in oil prices with rates halving to below $50 per barrel has added to the problems as Venezuela is finding it difficult to meet its budget. OVL had in 2003 acquired 25% interest in the Greater Nile Oil Project in Sudan. China’s CNPC holds 40% stake in the project while Malaysia’s Petronas has 30% and Sudapet of Sudan their remaining 5%. GNOP consisted of the upstream assets of on-land Blocks 1, 2 and 4 spread over 49,500 sq km in the Muglad Basin, located about 780 km South-West of the capital city of Khartoum in Sudan.
The crude oil produced from oil field of GNOP, is transported through a 1504-km pipeline to Port Sudan at Red Sea. Upon secession of South Sudan from Sudan in July 2011, the contract areas of Blocks 1, 2 and 4 which straddle between Sudan and South Sudan was split with major share of production and reserves are now situated in the South Sudan. Post secession, as the government of Sudan’s share of total production from Sudan was not sufficient to meet requirements of local refineries, foreign firms were asked to sell their share of crude oil to it.
However, the payment of dues on account of crude oil purchased by government of Sudan has not been received, they said adding OVL’s share of the outstanding dues is about $192.31 million as on 31 March 2015. OVL’s share of oil production from GNOP, Sudan was 0.7 million tons in 2014-15.
OVL had along with state-owned Oil India Ltd constructed and financed a 741-km multi-product pipeline from Khartoum refinery to Port Sudan for $194 million. OVL’s share of project cost was 90% while the rest was borne by OIL. The pipeline was handed over to government of Sudan in October 2005. The lump sum price, together with lease rent was to OVL in 18 equal half yearly instalments effective from December 2005.
While payment of 11 half-yearly instalments due till December, 2010 was received from the government of Sudan, remaining seven instalments due from 30 June 2011 to 30 June 2014, are yet to be released, a person familiar with the matter said. OVL, whose share of investment in the project was $158.01 million, has been following up for realisation of $98.94 million from government of Sudan at various levels.