MUMBAI, Sept. 22 -- The largest overseas investment made by India's ONGC Videsh Ltd. (OVL)—for oil exploration in Sakhalin field in Russia)—is finally bearing fruit. ONGC Videsh is the overseas arm of India's state-run Oil & Natural Gas Corp. (ONGC).
The first parcel of crude from Sakhalin to India is scheduled to arrive in mid-November. Pilot production has already begun in Sakhalin, and commercial production is expected to follow soon.
"Around 90,000 tonnes of crude parcel from Sakhalin will be brought to our subsidiary Mangalore Refinery & Petrochemicals Ltd. (MRPL) for processing in the second week of November," said R.S. Sharma, ONGC's acting chairman and managing director.
The Petroleum Ministry is arranging for Prime Minister Manmohan Singh to receive the crude at Mangalore and lay the foundation stone for the new ONGC petrochemical complex in the coastal city (OGJ, Aug. 21, 2006, Newsletter).
ONGC has invested $2.8 billion in the Sakhalin project, the single largest investment by any entity outside India.
ONGC also has ambitious investment plans for the establishment of an LNG terminal in the Mangalore Special Economic Zone.
"Sourcing LNG is a major factor in the current situation," Sharma said. "We are aware of the constraints. But whatever they may be, the ONGC-MRPL management stands committed to work in this direction. We are making our own arrangements to bring LNG to Mangalore."
For strategic reasons, Sharma declined to elaborate further on these arrangements. However, ONGC seems to have tabled its forward integration plans via setting up a countrywide petroleum products retail network.
"There has been an unprecedented increase in the prices of oil [since] the company got licenses for setting up retail outlets," Sharma said. "Now that oil prices are coming down, the retail outlet business will have growth potential. However, I would not like to give any categorical commitment at this stage."