ONGC to Meet Iran Oil Officials Seeking Opportunities
Nov. 26 (Bloomberg) -- Oil & Natural Gas Corp., India's biggest energy producer, plans to discuss "specific opportunities" with executives from National Iranian Oil Co. next week, said Chairman and Managing Director R.S. Sharma.
"In import-dependent countries like ours, we have to see where are the future sources of energy supplies," Sharma said in an interview in his office in New Delhi. "Iran, they have the second-largest crude oil and gas reserves and they are not very well exploited."
India is competing with countries including China and South Korea for natural resources overseas as output from domestic fields declines and requirements increase in the world's second- fastest growing major economy. Domestic demand for oil may grow at as much as 4 percent in 2010, Sharma said. ONGC's plans to develop projects in Iran have been delayed by the ongoing attempts to halt the Middle Eastern nation's nuclear program.
"It's always good to have your own oil assets when prices and supply are volatile," said Vaibhav Sanghavi, a director at Ambit Capital Ltd. in Mumbai who manages funds for wealthy individuals. "You just go wherever you have to."
ONGC, which completed the acquisition of U.K.-based Imperial Energy Plc this year, is targeting production of 60 million metric tons of oil and gas overseas by 2025, almost double India's output in the year ended March 31. Crude prices have declined 48 percent since reaching a record in July 2008.
The state-run explorer is also looking to bid in Iraq's second round of oil-area auctions and buying fields in countries such as Russia, Sharma, 58, said.
Easier Access
"We have to see where we have comparatively easier access," Sharma said. "Being a national oil company, we can leverage our position to get access to these opportunities."
ONGC shares were little changed at 1,179.90 rupees at 11:00 a.m. in Mumbai trading. The stock has gained 77 percent this year, tracking the benchmark Sensitive Index of the Bombay Stock Exchange. The meeting with the Iranian delegation is scheduled for Nov. 30, Sharma said.
ONGC is in talks with state-owned Petropars Ltd. to buy a stake in South Pars, Iran's largest natural gas field, R.S. Butola, managing director of ONGC Videsh Ltd., the overseas unit, said Oct. 6. The company discovered gas in Iran's Farsi block in partnership with refiner Indian Oil Corp. and Oil India Ltd.
The explorer may bid for blocks in Venezuela's Orinoco Belt, according to Butola. The South American country plans to open bids on Jan. 28 to pump 400,000 barrels a day from the Carabobo blocks.
Refinancing Debt
ONGC, which bought Imperial for 1.4 billion pounds ($2.3 billion), produces about 15,000 to 16,000 barrels a day from its fields in Siberia, less than potential, because prices are low, Sharma said.
The explorer is looking to refinance about $1 billion in debt raised to buy Imperial, Sharma said. ONGC may issue bonds or borrow in the domestic or overseas market before the debt matures in January.
ONGC is betting on higher crude oil prices to make its planned acquisitions viable. The explorer bid for Imperial in August 2008, after crude prices started declining from the all- time high of $147.27 a barrel on July 11 last year.
"We had done due diligence at $85, when crude was trading at $120," Sharma said. "We know prices are not going to remain soft and energy security is a major issue."
Oil prices may rise because of speculation by traders and world supply being unable to keep up with demand, Sharma said. "As of end October, 129 vessels, big and small, loaded with crude, are on the high seas. These market players have turned speculators and now hoarders," he said.
Both oil producers and refiners are happiest when prices of crude range from $60 to $80 a barrel, Sharma said.
To contact the reporter on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net .
Nov. 26 (Bloomberg) -- Oil & Natural Gas Corp., India's biggest energy producer, plans to discuss "specific opportunities" with executives from National Iranian Oil Co. next week, said Chairman and Managing Director R.S. Sharma.
"In import-dependent countries like ours, we have to see where are the future sources of energy supplies," Sharma said in an interview in his office in New Delhi. "Iran, they have the second-largest crude oil and gas reserves and they are not very well exploited."
India is competing with countries including China and South Korea for natural resources overseas as output from domestic fields declines and requirements increase in the world's second- fastest growing major economy. Domestic demand for oil may grow at as much as 4 percent in 2010, Sharma said. ONGC's plans to develop projects in Iran have been delayed by the ongoing attempts to halt the Middle Eastern nation's nuclear program.
"It's always good to have your own oil assets when prices and supply are volatile," said Vaibhav Sanghavi, a director at Ambit Capital Ltd. in Mumbai who manages funds for wealthy individuals. "You just go wherever you have to."
ONGC, which completed the acquisition of U.K.-based Imperial Energy Plc this year, is targeting production of 60 million metric tons of oil and gas overseas by 2025, almost double India's output in the year ended March 31. Crude prices have declined 48 percent since reaching a record in July 2008.
The state-run explorer is also looking to bid in Iraq's second round of oil-area auctions and buying fields in countries such as Russia, Sharma, 58, said.
Easier Access
"We have to see where we have comparatively easier access," Sharma said. "Being a national oil company, we can leverage our position to get access to these opportunities."
ONGC shares were little changed at 1,179.90 rupees at 11:00 a.m. in Mumbai trading. The stock has gained 77 percent this year, tracking the benchmark Sensitive Index of the Bombay Stock Exchange. The meeting with the Iranian delegation is scheduled for Nov. 30, Sharma said.
ONGC is in talks with state-owned Petropars Ltd. to buy a stake in South Pars, Iran's largest natural gas field, R.S. Butola, managing director of ONGC Videsh Ltd., the overseas unit, said Oct. 6. The company discovered gas in Iran's Farsi block in partnership with refiner Indian Oil Corp. and Oil India Ltd.
The explorer may bid for blocks in Venezuela's Orinoco Belt, according to Butola. The South American country plans to open bids on Jan. 28 to pump 400,000 barrels a day from the Carabobo blocks.
Refinancing Debt
ONGC, which bought Imperial for 1.4 billion pounds ($2.3 billion), produces about 15,000 to 16,000 barrels a day from its fields in Siberia, less than potential, because prices are low, Sharma said.
The explorer is looking to refinance about $1 billion in debt raised to buy Imperial, Sharma said. ONGC may issue bonds or borrow in the domestic or overseas market before the debt matures in January.
ONGC is betting on higher crude oil prices to make its planned acquisitions viable. The explorer bid for Imperial in August 2008, after crude prices started declining from the all- time high of $147.27 a barrel on July 11 last year.
"We had done due diligence at $85, when crude was trading at $120," Sharma said. "We know prices are not going to remain soft and energy security is a major issue."
Oil prices may rise because of speculation by traders and world supply being unable to keep up with demand, Sharma said. "As of end October, 129 vessels, big and small, loaded with crude, are on the high seas. These market players have turned speculators and now hoarders," he said.
Both oil producers and refiners are happiest when prices of crude range from $60 to $80 a barrel, Sharma said.
To contact the reporter on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net .
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