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ONGC Videsh Ltd will acquire 25 per cent stake in Kazakhstan's Satpayev offshore exploration block. The potential oil resources estimated for this block is 1.8 billion barrels. Oil is expected to flow by 2020.
OVL signed a tripartite agreement with the Ministry of Oil and Gas of Kazakhstan and KazMunaiGaz (KMG), the national oil company of Kazakhstan, amending an exploration and production contract to conclude the deal, an official statement said.
The agreement was signed in Astana, Kazakhstan, in the presence of Mr R.P.N. Singh, Minister of State for Petroleum & Natural Gas, .
Mr Singh is leading an inter-ministerial delegation to Kazakhstan for the 9th meeting of the India-Kazakhstan Inter-Governmental Commission on Trade, Economic, Scientific, Technological, Industrial and Cultural Cooperation.
On April 16, OVL had signed definitive agreements with KMG for acquiring a 25 per cent participating interest in the Satpayev exploration block, marking its entry in the Kazakhstan hydrocarbon sector.
The block
The Satpayev exploration block is situated in a highly prospective region of North Caspian Sea. The block contains two prospective structures with 256 million tonnes in estimated hydrocarbon resources. OVL has already got the Cabinet's approval to invest $400 million in the block.
The package of three agreements signed between OVL and KMG apart from the participating share assignment agreement, included a carry agreement and joint operating agreement. The carry agreement spells out that OVL can sell any discovery in Satpayev Block locally and use cash generated from such transaction for purchases elsewhere. This is mainly because there are no means to transport oil from Kazakhstan to India.
A Joint Operating Agreement on running the exploration block was also signed by OVL and KMG.
Foothold in Kazakh
Although OVL has been trying to gain a foothold in Kazakhstan since 1995, the efforts got a boost when OVL entered into a memorandum of understanding with KazMunaiGas in February 2005 for cooperation in the hydrocarbon sector. Kazakhstan is important for world energy markets because it has significant oil and natural gas reserves.
According to some estimates, Kazakhstan is set to become one of the world's top ten oil producers by 2025, and one of the top three non-OPEC contributors to production growth. Oil production in Kazakhstan has increased from 410,000 barrels a day in 1995 to 1.7 million b/d in 2010.
GAIL's interest
Mr Singh also conveyed GAIL (India) Ltd's keenness to participate in the gas-based and petrochemical plants in Kazakhstan, as also its interest in the Butadiene manufacturing project of the United Chemical Company of Kazakhstan.
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