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OVL’s associated gas plant in Russia gets delayed, to be ready by May

Saurabh Kumar

ONGC Videsh s (OVL) associated petroleum gas plant slated to come up at its loss-making fields acquired from Imperial Energy in Russia s Tomsk region is facing delay and is likely to be on stream by the middle of this year, according to a company executive. The company was expecting the facility to become operational by December 2018. The facility will be operational by May 2019, OVL managing director NK Verma said.

OVL, the overseas arm of ONGC, is in the process of creating a facility at the site which will enable the use of associated gas produced from the field to enhance crude oil production and also produce value-added products.

Associated gas is a type of natural gas found mixed with crude oil reserves or floating above crude oil reservoirs. Usually, this gas is flared or burnt. However, as per local laws since it affects the environment authorities have a penal provision. Instead, OVL plans to utilise the gas to augment production which is fledgling.

According to Verma, the facility will allow OVL to operate 15-20 wells which the company had shut to avoid penalties. In 2009, OVL acquired the assets of the UK-listed Imperial Energy for a consideration of $2.1 billion and has invested additional $300 million for development. Crude oil production from the assets, however, has been disappointing at 7,000 barrels per day (bpd) compared with the initial estimates of around 80,000 bpd.

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While OVL has on several occasions sought tax concessions from the Russian government, the requests have been turned down as a similar tax structure is applicable to all producers in the region. Verma also added that OVL is expecting more discoveries in Colombia, as the company plans to drill more exploratory wells in the CPO-5 onshore block.

The explorer last week announced discovery of oil in the well Indico-1 in the block. This is the second discovery in the area after Mariposa-1 well in the oil corridor in 2017. OVL is the operator of the block with a 70% per cent stake while Colombia s Petrodorado South America SA the remaining 30%.