State-owned ONGC’s overseas arm ONGC Videsh ltd (OVl) has bid for oil and gas blocks in the island nation, auction for which is currently going on. OVl went ahead after the Ministry of External Affairs (MEA) gave it the required clearance.
The move is also being seen as a step (though belated) towards countering China’s increasing presence in Sri lanka, which has been a major cause of concern within the Government, especially the Petroleum Ministry whose entities like OVl have faced stiff competition from Chinese companies while bidding for overseas oil and gas blocks.
Official sources told The Pioneer that the Petroleum Ministry, though keen to participate, had sought the MEA’s go-ahead as South Block’s intervention was required keeping in mind the geo-political concerns. The MEA though, they added, gave its okay last week and OVl has thus bid for around 13 offshore blocks of oil and gas which are on offer. These are situated in the Cauvery and Munnar basins.
Incidentally the MEA’s clearance has come at the right time as the bidding for these blocks will close on November 29.
If OVl is successful in seeking a block, it would be any Indian entity’s first-ever presence in Sri lanka’s hydrocarbon reserves. Petroleum Ministry officials are keen that OVl succeeds in its bid as the blocks are of strategic importance and India’s presence in them would give it an added advantage in the region.
As of now, sources privy to the development said that none of the Indian oil and gas entities have any equity presence in Sri lanka’s hydrocarbon reserves, which is being considered as a major cause of concern within Government circles.
Though lanka IOC, Indian Oil’s subsidiary in Sri lanka is currently the only private oil company other than the state-owned Ceylon Petroleum Corporation (CPC) that operates petrol and diesel stations in that country, it is more into retail business and has nothing to do with participation in oil and gas blocks there.
New Delhi is keen to mark its presence in Sri lanka’s hydrocarbon sector as China has increasingly become a far bigger strategic partner of Sri lanka in the recent years. In fact as per the 2012 report of Sri lanka’s Ministry of Finance and Planning, China has emerged as the largest development aid provider to Sri lanka, having given it $1.05 billion, whereas India stood a distant second at $700 million worth of aid.
Apart from this, China has also been helping Sri lanka develop several of its infrastructure projects and there is fear within the power circles in New Delhi that Beijing may become a threat to Indian business interests in the island nation’s oil and gas reserves. This has triggered OVl’s interest in bidding for the reserves situated in Sri lanka.