Cabinet clears OVL's exit from Trinidad exploration venture

The cabinet committee on economic affairs (CCEA) today granted ex-post-facto approval for withdrawal of ONGC Videsh Limited (OVL), a partner in the ONGC Mittal Energy Ltd (OMEL) venture, from the oil exploration joint project in Trinidad & Tobago.

OVL had incurred an expenditure of over $1 million in the North Coast Marine Area 2 (NCMA 2) project.

OMEL exited the project after Mittal's investment arm Mittal Investment Saral (MIS) expressed its intention to withdraw from the block in view of the global economic meltdown and the inability of OEML to finalise the carry agreement with its Trinidad partner, Petrotrin.

OMEL's exit forced OVL to re examine the previous evaluation to assess whether OVL could take the entire available stake.

The CCEA had, at its meeting held in June 2008, considered and approved the investment by OVL in exploratory block NCMA 2.

National Oil Company of Trinidad & Tobago (Pertrotrin) had a participating interest (PI) of up to 35 per cent during the first exploration phase in NCMA 2 project. Thereafter, Pertotrin was supposed to pay for its PI. The remaining 65 per cent PI was to be acquired by OMEL wherein OVL's share of investment was up to $155 million, with an internal rate of return of over 14 per cent.