ONGC Videsh Ltd, the overseas arm of Oil and Natural Gas Corp (ONGC), has sought yet another two-year extension to explore a Vietnamese oil block in the contested waters of the South China Sea. Officials said OVL has applied for a sixth extension to explore Block-128, the licence for which was valid till June 15, 2019.
While India wants to maintain its strategic interest in the South China Sea, Vietnam wants an Indian firm to counter China’s interventions in the contested waters.
The officials said OVL had in May applied to the Vietnamese authorities for the sixth extension of the exploration licence for the deep sea block and is likely to get it.
“We have a commitment to drill one well on the block and to fulfill that we have sought an extension,” one of the officials said.
Another official said the company had a couple of years ago drilled a well on the block but it could not reach the target depth and so it now has to drill the well all over again.
“If we don’t drill, we are liable to pay penalties,” he said.
OVL had signed 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), Vietnam, issued an investment licence for the block on June 16, 2006, being effective date of the PSC.
The company has not found any hydrocarbon in the block but is continuing to stay invested to maintain India’s strategic interest.
OVL first took a two-year extension of the exploration period till June 2014 and then another one year. A third extension was granted on May 28, 2015, and a fourth in 2016. It got the fifth extension for two years in 2017.
The company has so far invested USD 50.88 million in the block.
The block lies in the part of the South China Sea over which China claims sovereignty. In 2011, Beijing had warned OVL that its exploration activities off the Vietnam coast were illegal and violated China’s sovereignty, but the company continued exploring for oil and gas.
OVL made a foray into Vietnam as early as 1988, when it bagged the exploration licence for Block 6.1.
Last month, China sent its coast guard ships into Block 6.01.
“Their (Chinese) vessel came 5 nautical miles near the oil rig on the block on August 13. They withdrew after a couple of days,” the official said adding that operations in the block were not affected.
This, he said, was the third instance of Chinese vessel intruding into the block, where Russia’s Rosneft is the operator.
OVL owns 45 per cent stake in Block 6.01 and its share of production was 2.023 billion cubic metres of gas and 0.036 million tonnes of condensate.
The 955 sq km Block 06.1 located in Nam Con Son basin has two producing fields — Lan Tay and Lan Rosneft — and has 35 per cent stake while the remaining 20 per cent is with PetroVietnam.
The firm had in 2006 got two exploration blocks – Block 127 and Block 128. While Block 127 was relinquished due to poor prospects, the other block was retained.
The first extension for Block 128 followed China putting the area under Block 128 for global bidding.
China claims sovereignty over most of the South China Sea where the two blocks are located and had warned the Indian arm from drilling in the region.
