India’s leading overseas oil firm, ONGC Videsh Ltd (OVL), has successfully secured a 16-year extension on its contract for producing oil and gas in Vietnam, alongside obtaining an additional three years to explore a separate block in the contested South China Sea, according to officials. Vietnamese authorities have extended the production sharing contract (PSC) for Block 06.1, located in the offshore Nam Con Son basin, until 2039.
Additionally, they have granted an eighth extension for oil and gas exploration in Block 128, situated in the South China Sea. OVL, the international investment division of the state-owned ONGC, holds a 45% interest in Block 06.1, an offshore block in Vietnam’s Nam Con Son Basin. Acquired in 1988, this block has Zarubezhneft EP BV as the operator with a 35% stake, while PetroVietnam holds the remaining 20%.
The block, which produces approximately 1 million tonnes of oil and oil equivalent gas, recently received a 16-year extension for the production sharing contract, effective from May 19, 2023. For Block 128, the previous extension for exploration was set to expire on June 15, 2023. OVL requested a three-year extension, which the Vietnamese regulator PVN granted, extending the license until June 15, 2026.
Despite 18 years of exploration, the company has yet to discover commercially viable oil and gas reserves in the block. However, OVL has maintained its presence due to India’s strategic interests in the South China Sea, where Vietnam also supports the Indian firm’s involvement to counterbalance China’s influence.
OVL initially signed a production sharing contract with Vietnam’s national oil company PetroVietnam for the deepwater Block-128, covering an area of 7,058 square kilometers in the Offshore Phu Khanh Basin, in May 2006. The investment license was issued on June 16, 2006, making the PSC effective. The firm has met the license requirements, including shooting 3D seismic data, reprocessing 2D seismic data, and drilling the committed well.
Officials mentioned that OVL has acquired 3D seismic data and reprocessed 2D seismic data as part of the minimum work program for the first phase of the exploration period. Petroleum system modeling studies have also been conducted using data provided by PetroVietnam. To further evaluate the block’s prospects and reduce potential risks, the company has now requested seismic data from PVN for the eastern and western regions of the block.
OVL has previously obtained several extensions for the exploration period, including a two-year extension until June 2014, followed by another one-year extension. Additional extensions were granted in 2015, 2016, 2017, 2019, and 2021, with the most recent seventh extension lasting until June 15, 2023. An official noted that the company drilled a well on the block a few years ago but did not reach the target depth, necessitating a repeat of the drilling process.
Although OVL has not yet found hydrocarbons in the block, it remains invested due to India’s strategic interests. The block is located in a section of the South China Sea claimed by China. In 2011, Beijing warned OVL that its exploration activities off the Vietnamese coast were illegal and violated China’s sovereignty, but the company continued its efforts.
OVL’s involvement in Vietnam dates back to 1988 when it secured an exploration license for Block 06.1. The company owns a 45% stake in Block 06.1, with its share of condensate and oil equivalent gas production from the block amounting to 0.421 million tonnes during the 2023-24 fiscal year.
In 2006, OVL acquired two exploration blocks—Block 127 and Block 128. While Block 127 was relinquished due to poor prospects, Block 128 was retained. The first extension for Block 128 followed China’s decision to include the area under the block in a global bidding process.
ONGC Videsh Ltd is the international arm of Oil and Natural Gas Corporation (ONGC), India’s leading state-owned energy company. Specializing in exploration and production, ONGC Videsh operates in over 15 countries, managing significant oil and gas assets. It plays a crucial role in securing India’s energy needs through strategic global investments and partnerships.
