India ONGC Close to Iraq Oil Deal-Company

Source: Reuters 5/4/2009, Location: Middle East

A unit of India's state-run Oil and Natural Gas Corp is close to completing renegotiation of an oil deal in Iraq signed under Saddam Hussein, company sources said. Iraq needs tens of billions of dollars of investment to overhaul its ageing oil infrastructure and boost production. It desperately needs revenue from increased oil output to rebuild after years of sanctions and war.

"The deal will be done shortly," the source at ONGC's overseas investment arm ONGC Videsh (OVL) told Reuters. "We have had three or four meetings and have more lined up." The exploration deal would be for Block Number 8 in Iraq's western desert. The deal was first signed in 2000. The source declined to give details of the investment OVL would make at Block 8. An industry source estimated exploration and development would cost around $1.5 billion.

A team of Iraqi officials visited India in April to discuss the terms of the deal, another source said. "Discussions with them were very positive on negotiation of new terms and conditions," he said. "Once these are settled, we are ready to sign the contract and begin from where we have left off." The deal would be the second renegotiated after the U.S.-led invasion of Iraq in 2003. Iraq and China agreed revised terms for a $3 billion oilfield service contract in August.

Russia has pressed Baghdad to revive another Saddam-era deal, a $3.7 billion agreement oil group LUKOIL signed to develop Iraq's West Qurna oilfield struck in 1996. Saddam's government tore up the deal in 2002, saying the Russian company had done no work at the field. Baghdad has to date declined to restore that deal, although Russia's energy minister said last month the two sides had agreed to work on it.


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Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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