ONGC Videsh Extends Oil Production and Exploration Rights in Vietnam

ONGC Videsh, the international arm of the Oil and Natural Gas Corporation (ONGC), has achieved significant milestones. Vietnamese authorities have granted crucial extensions for its oil and gas operations in the region. The company has secured a 16-year extension for oil and gas production in Block 06.1 and a three-year extension for exploration in Block 128 in the South China Sea.

Under the extended Production Sharing Contract (PSC) for Block 06.1, located in the offshore Nam Con Son basin, ONGC Videsh will continue operations until 2039. This vital source of production yields ~1 million tonnes of oil and oil equivalent gas. ONGC Videsh holds a 45% stake in this block, with Zarubezhneft EP BV as the operator (35%) and PetroVietnam owning the remaining 20%.

In addition, ONGC Videsh has received an eighth extension for exploration activities in Block 128 in the South China Sea. The previous extension for this block was valid until June 15, 2023. The Vietnamese regulator, PVN, has now granted a new three-year extension, extending the license until June 15, 2026. Despite the absence of commercially recoverable reserves in Block 128 for the past 18 years, ONGC Videsh maintains its interest due to strategic considerations related to India’s presence in the South China Sea.

ONGC Videsh first entered Vietnam in 1988 with the acquisition of exploration rights for Block 06.1. It expanded its footprint in 2006 by acquiring Blocks 127 and 128. Block 127 eventually relinquished due to poor prospects, while Block 128 remained under its exploration portfolio.

In related developments, ONGC Videsh recently received approval from the Government of India to invest ₹18,365 crore into ONGC Petro additions Limited (OPaL), marking OPaL’s elevation to a subsidiary of ONGC. Furthermore, the Ministry of Petroleum and Natural Gas has announced a 20% premium on gas produced from new wells or interventions, a move that has positively impacted investor sentiment and brokerages.

On August 20, 2024, the share price of ONGC opened at ₹335.85, touching the day’s low at ₹328.50, as of 11:01 AM on the NSE.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.