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Gabon oil block likely to slip from OVL's grasp

Richa Mishra

Assets may go to China

New Delhi , July 16

India seems to be facing tough competition again from China in a bid to acquire an oil-producing block abroad.

ONGC Videsh Ltd (OVL) has been left behind in acquiring stake in one of the three producing blocks in Gabon held by a listed oil firm of Canada.

Sources said that OVL's bid was not found good enough to acquire the assets and indications are that it may finally go to China.

When contacted by Business Line, sources in OVL, however, maintained that "the matter was still under consideration."

OVL had identified two blocks in Gabon for bidding, of which the company considered one. JP Morgan had been appointed as the investment banker for the bid.

According to the sources, the property for which OVL has bid was a challenging proposition as the reserves are scattered and may need some innovative ways to get the best results.

The bid size was over $1 billion, given that the properties are producing oil blocks, the sources said.

The major exploration players in Gabon are Shell, Total, Vaalco, and Marathon. Gabon had proven oil reserves of 2.5 billion barrels as of January 2005.

The country is sub-Saharan Africa's fifth largest producer of crude oil after Nigeria, Angola, Sudan, and Equatorial Guinea, at approximately 233,000 barrels per day.

Gabon's projected oil consumption in 2005 is 10,700 barrels per day, with net oil exports of approximately 222,300 barrels.

The country is also the fifth largest exporter of crude oil, with over half of its exports at 126,000 barrels per day going to the US. The rest goes to Western Europe and Asia.

OVL, the overseas arm of ONGC, which has expanded its portfolio significantly in the recent past, made nine acquisitions in 2005-06 and five in the previous fiscal. Currently, it has 21 projects (31 blocks) in 13 countries.

The company has set a target of acquiring 60 million tonnes per annum of oil and gas equity overseas by 2025. OVL is currently working towards a goal of 20 million tonnes per annum by 2010.

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