ONGC Videsh, overseas arm of Oil and Natural Gas Corporation, will get 15 per cent less crude oil from the Sakhalin I oil field in Russia from next year due to declining reserves.
OVL, which has a 20 per cent stake in the oil field in Russia's far east, currently gets around 38,000 barrels of oil per day of the total production of 190,000 barrels per day. OVL's share is expected to fall to 32,000 barrels even as the overall production from the field is likely to come down to 160,000 barrels from next year.
"The field is witnessing a drop in production since last year," said a senior OVL official, who did not want to be named citing company policy. The official did not disclose the financial impact of the fall in its share.
OVL, a 100 per cent subsidiary of India's biggest oil producer, paid $1.7 billion for a 20 per cent stake in Sakhalin I, which reached a peak production (the highest rate of output) of 250,000 barrel in February 2007.
OVL, which has 38 oil and gas assets in 18 countries, currently produces around 176,000 barrels per day from its assets. Its parent ONGC produces around 600,000 barrels from its oil fields in India.
The Sakhalin I consortium - Exxon with 30 per cent stake, Russia's Rosneft with 20 per cent, OVL's 20 per cent and Japan's Sakhalin Oil and Gas Development Co with 30 per cent stake - plans to enhance production from the field by 2010 after implementing various high recovery methods.
OVL does not bring its share of oil from its overseas assets to India. Instead, it brings the money it gets from selling the oil in global markets and uses that money to buy more oil assets. However, it had brought one cargo of Sakhalin I oil to its subsidiary Mangalore Refinery and Petrochemical refinery in Mangalore in early 2007.
Meanwhile, OVL is also keen on bidding for oil blocks in Angola and Colombia which are likely to take place later this year.
The company is also one of the 35 companies short-listed by the Iraqi government for developing around 10 blocks in which oil and gas have already been discovered.
"The Iraq government is holding a roadshow in London next month and we plan to participate," the OVL official said. War-torn Iraq has the world's third largest proven oil reserves with production affected due to political turmoil.
Iraq is now opening up the fields to overseas companies in a bid to restart production.
OVL has also relinquished the Najwat Najem oil block in Qatar after it found that the oil reserves in the block were too little and not commercially viable. OVL had started testing the viability of the block in March 2005.