ONGC Videsh (OVL), which has been in an aggressive mode to acquire hydrocarbon assets overseas, has turned introspective. The overseas subsidiary of state-run ONGC is putting in place an exit strategy with an aim to keep only those assets that give returns compatible with its mandate to boost the countrys energy security.
So far, the government-owned explorers exit plans have been rather nebulous, and it has relinquished only those blocks in which it did not find any hydrocarbon that could be commercially mined. The exits, however, would only enhance its capacity for acquiring new attractive assets.
Earlier, we had no policy of exiting a project. But now we have revised our business development policy comprising an exit option. We keep on reviewing the projects and whenever it is felt that we should exit the project, we would now do it unhesitatingly, SP Garg, managing director of OVL, told FE.
OVLs cumulative investment up to March 31, 2013, was $16.75 billion, of which 73% was financed through internal accruals. The companys net profit has increased from R2,807 crore in FY09 to R3,929 crore in FY13.
It targets to increase its output manifold to 60 million tonnes of oil equivalent (mtoe) by 2030 from 8.36 mtoe currently.
OVLs production started in 2002-03 from Block 06.1 in Vietnam in January 2003 and from Greater Nile Oil Project in Sudan in March 2003.
Sources said OVLs assets in North and South Sudan and Syria are in distress because of geo-political disturbances. Also, another prolific asset in Venezuela runs the risk of facing similar hindrances and could be put on the block.
Garg, however, said that as of now OVL has not decided to exit any particular project. Earlier, we did not have this strategic thinking (of exiting acquired assets). We no longer think that whatever we have acquired is necessarily a life-long agenda. Exiting at the right time is part of the programme, he explained.
Exiting projects is not unique for OVL. For oil and gas exploration companies, monitoring of assets is a regular feature.
They get out of acreages that do not offer the requisite return.
OVLs incremental production in FY14 came from assets in Azerbaijan, Brazil and Venezuela. In FY13, the firm reported profit after tax of Rs 3,929 crore on revenues of Rs 18,029 crore.
Currently, OVL has 32 projects in 16 countries. Of this, 11 projects are producing, while 5 acreages are discovered assets and under development. The