OVL Secures Contract Extension for Vietnam Oil Blocks.

India's leading overseas oil firm, ONGC Videsh Ltd (OVL), has secured a 16-year extension for its production sharing contract (PSC) for Block 06.1 in Vietnam's Nam Con Son Basin, allowing it to continue producing oil and gas until 2039. In addition, the Vietnamese authorities have granted a three-year extension for OVL to continue exploring Block 128 in the contested waters of the South China Sea, according to company officials.

OVL, the overseas arm of the state-owned Oil and Natural Gas Corporation (ONGC), holds a 45% stake in Block 06.1, which was acquired in 1988. The block, operated by Zarubezhneft EP BV (35% interest) with PetroVietnam holding the remaining 20%, produces approximately 1 million tonnes of oil and oil equivalent gas annually. The extension of the PSC for this block is effective from May 19, 2023.

For Block 128, which has seen exploration efforts since 2006, the latest extension extends the exploration license until June 15, 2026. Despite not yet finding commercially viable reserves, OVL has maintained its presence in the block due to India's strategic interests in the South China Sea, an area marked by territorial disputes with China. The Vietnamese government supports OVL's continued exploration efforts as a counterbalance to Chinese influence in the region.

OVL first entered Vietnam in 1988 with the exploration license for Block 06.1 and expanded its operations in 2006 by acquiring exploration licenses for Blocks 127 and 128. While Block 127 was relinquished due to poor prospects, Block 128 was retained and has seen multiple extensions over the years despite challenging exploration conditions.

The company has undertaken extensive seismic data acquisition and reprocessing as part of its exploration efforts and continues to seek further data to assess the block's potential. The ongoing work in Block 128, which lies in an area claimed by China, underscores India's strategic interest in maintaining a presence in the South China Sea, despite past warnings from Beijing.

HBL