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OVL Plans Fresh Bid to Acquire Oil Sands Assets

  • ONGC arm on hunt for unconventional energy resources in Canada.After hitting a roadblock in its hunt for oil sands assets in Alberta, ONGC Videsh (OVL) will make yet another bid to acquire unconventional energy resources, the government-run explorer’s director (exploration) Narendra K Verma said on Tuesdady.Last year, the public sector explorer’s negotiations with the Houston-based Marathon Oil Corporation to acquire 10 per cent stake in an oil sand project in Alberta, Canada, fell through after Marathon decided not to sell equity in the project. OVL has been on hunt to acquire equity stake in oil sands projects in Canada and invest up to $4 billion.

  • “Prices of unconventional hydrocarbon assets is on rise due to intense competition and enhanced profitability from these resources,” Verma said.He has succeeded Joeman Thomas as OVL’s head of exploration. Thomas retired in December 2011.“It will be prudent to pursue targeted investments for acquisition of unconventional oil and gas assets that have very high reserve-production ratio,” Verma explained. Exploitation of oil sands will become economically viable if global crude oil price remains above $80 a barrel. Since, crude oil price is hovering above $100 a barrel and is expected to stay at these levels for sometime, crude extracted from oil sands is expected to generate additional revenue for exploration companies.

  • Global oil majors such as Exxon Mobil and Royal Dutch Shell have already invested to exploit these unconventional resources. OVL anticipates that its oil and gas production would decline in the next financial year due to lower output from its assets in Russia, Sudan and Syria. The explorer has several projects in politically unstable countries such as Sudan, Libya and Syria that have lower ouput.“It is true that our production will decline this year,” OVL managing director Dinesh Sarraf was quoted saying by Down Jones Newswire.It has become important for OVL to acquire new producing assets in order to maintain production levels. “The need of the hour is to introspect, identify missed opportunities, erred strategies and gainfully utilise the lessons learnt so as to further improve our performance,” Verma said.

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