ONGC Videsh Ltd. (OVL), a fully owned subsidiary of ONGC, has signed a USD 194 Mn contract with the Ministry of Energy and Mining, Govt. of Sudan on 30th June, 2004 for construction of 741 Kms long multi-product Pipeline.
This is the maiden Engineering & Construction Project of ONGC Group abroad. The proposal of OVL to enter into an Agreement with Govt. of Sudan, to construct a multi-product Pipeline system, was approved by the Cabinet Committee of Economic Affairs (CCEA) on June 24,2004.
Sudan Pipeline Project envisages laying of a Pipeline System from Khartoum Refinery to Port Sudan (741 Kms. long and 12” dia) for evacuation of the petro-products from Khartoum Refinery, capacity of which is being upgraded by Govt. of Sudan. The Pipeline system is designed for a throughput of 0.826 MMTPA in phase I and 2.54 MMTPA in phase II, of MO Gas & Gas Oil. The Pipeline is to be laid in the existing ROW (Right of Way). The project is to be completed in 16 months.
The project will be undertaken by OVL with the Design, Engineering and Project management support of ONGC’s Engineering Services, Mumbai which has an experience of construction and maintenance of its own existing onshore as well as offshore Pipeline network of over 10,000 Kms. The consortium lead by M/s Dodsal pte, Dubai has been already selected for the Engineering, Procurement and Construction (EPC) contract by OVL through International Competitive Bidding (ICB) tender. The Notice of Award has been issued to them on July 01, 2004.
OVL, presently, has an equity stake in the E&P projects in Sudan. The E&P projects are Greater Nile Oil Project (GNOP), promising 3.3 MMTPA of crude oil and 5A & 5B blocks, having a potential of up to 3-3.5 MMTPA of Crude oil.
Discussions on Rehabilitation and Expansion of Port Sudan Refinery in Sudan are at advanced stage. Detailed Feasibility Report and various options keeping in view the local demands and export potential have been submitted to Govt. of Sudan. These projects were identified in the joint communiqué issued by H.E. the Presidents of Sudan and India during the visit of Indian President to Sudan last year.
Mr. Subir Raha, Chairman, ONGC Videsh Ltd., expressed his gratitude to the Government and the People of Sudan, and observed that the expanding, multi-faceted commitment of ONGC Videsh will reinforce the centuries – old friendship between the two great countries.
The Hon’ble Minister of Petroleum & Natural Gas stated that the signing of the contract reflects the commitment of the two countries to strengthening their bilateral relations in the petroleum sector and such investment by OVL and other Indian companies will benefit and bring prosperity to the people of Sudan and India.
Some fundamental issues emerge from this case study of ONGC’s annual performance. One, the performance of a company like ONGC is subject to substantial regulatory risk. Second, it also exposes the limitation of annual results (figures) to reflect the actual performance trends of companies, as the influence of developmental projects (spanning over an year) are felt over extended periods, which do not get reflected by the annual figures.