Sunday, October 2, 2022

OVL seeks extension to explore oil block in South China Sea

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New Delhi: ONGC Videsh Ltd (OVL), state-run ONGC’s overseas arm, has sought a two-year extension for the sixth time to explore a Vietnamese oil block. The oil block lies in the contested waters of the South China Sea, which China claims as its own. Officials said that the licence for exploring Block-128 was expired on June 15 this year.

Drilling a well in contested waters

“We have a commitment to drill one well on the block and to fulfill that we have sought an extension,” one of the sources said. According to them, OVL had applied to the Vietnamese authorities for an extension of the exploration licence for the sixth time in May. They said that extension is likely to be granted.

Another official added that OVL had drilled a well on the block a couple of years ago. However, it could not reach the targeted depth and so it will have to drill the well all over again. “If we don’t drill, we are liable to pay penalties,” he said.
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The backdrop

OVL had signed a production sharing contract (PSC) for the 7,058 sq km Block 128 in offshore Phu Khanh Basin, Vietnam, on May 24, 2006. The Ministry of Planning and Investment (MPI) of Vietnam had issued an investment licence for the block on June 16, 2006.

The state-run company has not found any hydrocarbon in the block but continues to stay invested for India’s strategic interest. Vietnam, too, has roped in India into the project to counter China’s muscle show in the contested waters.

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