Financial Daily from THE HINDU group of publications
Tuesday, Feb 14, 2006
Corporate - Overseas Investments
ONGC may invest in oil sand extraction projects
Pratim Ranjan Bose
Kolkata , Feb. 13
ONGC Ltd is exploring the possibilities of investing in oil sand extraction projects. Oil sands or tar sands, a mined product found mostly in Canada and Venezuela, are deposits of bitumen (a heavy black viscous oil), which is treated to produce crude oil.
According to available estimates, the Alberta province of Canada holds the second biggest oil reserve after Saudi Arabia through its oil sand deposits.
Though denying having taken up any specific investment proposal in this regard, ONGC sources confirmed that the company was exploring investment possibilities in oil sand. Notes were also exchanged on the issue between the Indian exploration and production major and its overseas joint venture ONGC Mittal Energy Ltd (OMEL).
"We (ONGC) have been discussing about the possibilities of investing in oil sand projects for some time. However, we are yet to identify any proven technology for extracting oil from the same, without which no firm decision can be taken," an ONGC official told Business Line, adding that oil sand extraction technology was still in a nascent state. "We are continuing our search for technology," the official said.
Meanwhile, oil sand has attracted the attention of global energy majors, courtesy the high crude oil prices. Leading the pack is China, India's rival in global energy acquisition projects.
In April 2005, China National Offshore Oil Corporation had invested $121 million to acquire a 16.69 per cent stake in Calgary-based MEG Energy Corp, which in turn holds oil sand leases on 13,300 hectares in Alberta, estimated to contain four billion barrels of bitumen, which can be processed into two billion barrels of crude oil.
In June 2005, China Petroleum and Chemical Corporation had proposed Canadian $150 million investment in oil sand projects in Canada through its joint venture SinoCanada Petroleum Corp.
According to a Canadian government Web site on energy, oil sand currently represents 54 per cent of Alberta's total oil production, and about one-third of all the oil produced in Canada. By 2005, oil sands production is expected to represent 50 per cent of Canada's total crude oil output, and 10 per cent of North American production.
Apart from Canada and Venezuela, oil sand is also available in smaller deposits in 68 other countries including the CIS countries, Cuba, Indonesia, Brazil, Jordan, Madagascar, Trinidad, Colombia, Albania, Romania, Spain, Portugal, Nigeria and Argentina.
The United States has scattered deposits of oil sands.
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