Undaunted by China, New Delhi will sign pacts with Hanoi on Tuesday to step up energy cooperation including a pact between ONGC Videsh Ltd (OVL) and PetroVietnam (PVN) for taking up to 50 per cent equity each in the latter’s two blocks in the controversial South China Sea.
OVL will sign an agreement to take 40 per cent equity in block 102/10 and 50 per cent in 106/10 that lie outside the sea territory claimed by China. Once the pact is signed, the firms will negotiate the terms of the production sharing contract (PSC) under the Vietnam law.
The blocks are from among the five blocks offered by PVN last November. OVL’s technical team recommended them after a due diligence and techno-economic evaluation of the data.
In turn, PVN will sign an agreement to take 50 per cent equity in OVL’s Block 128 in South China Sea which the Indian firm had earlier planned to exit. OVL, which currently holds 100 per cent interest, would get a further two-year extension starting June 2014.
OVL is offering equity to PVN to de-risk exploration in the block over which China had claimed territorial rights. It had in June 2012 decided to return the block as exploration there wasn’t commercially viable but did a volte-face at the insistence of the external affairs ministry which wanted India to continue its presence in South China Sea.
The pacts would be signed during the visit of Vietnamese Prime Minister Nguyen Tan Dung who is on a two-day visit starting Monday to demonstrate oil and gas exploration as a key area of cooperation between the two nations. China has been objecting to India’s oil exploration projects in South China Sea, a major source of hydrocarbons. Hanoi says oil exploration projects by India in the sea are within the territorial waters of Vietnam.
However, a letter of intent signed between OVL and PVN during President Pranab Mukherjee’s Vietnam visit last month sparked off a foreign ministry statement in Beijing that China would not “support any agreement” that dealt with any “waters administered by China, or is not approved by China”. On Tuesday, OVL’s parent Oil & Natural Gas Corp will also sign an MoU with PVN for equity participation by the Vietnamese state-run company in exploration of hydrocarbons in nine blocks in India’s southern basins.
While five of them are onshore and offshore blocks in Cauvery basin, four are deepwater blocks in Andaman-Nicobar basin, a frontier zone that lies between producing fields in south Myanmar and northwest Indonesia.