NEW DELHI (Dow Jones Newswires), October 15, 2008
India's Oil & Natural Gas Corp., along with Chinese partner China Petroleum & Chemicals Corp., has entered into arbitration on a dispute with Colombian state oil company Ecopetrol S.A. over the Teca oil field, ONGC Chairman and Managing Director R.S. Sharma said Wednesday.
"There's some dispute. We are in arbitration, but we continue to operate the field," said Sharma.
The dispute is over the length of the license for the field given to ONGC's ONGC Videsh Ltd. unit, or OVL, and Sinopec, as the Chinese company is known, said another ONGC executive.
Revenues from the field will be held in a trust fund until the arbitration court makes a decision, Ecopetrol said in a statement.
"Sometimes there are differences over the extension periods for contracts, but we've all agreed to sort out the differences," an OVL executive said on condition of anonymity, declining to elaborate further.
Ecopetrol says the license ended Oct. 8, while OVL and Sinopec say it's valid until 2011, the Ecopetrol statement said. The original agreement established that after several years Ecopetrol's partner would hand over its stake to the Colombian company.
OVL Managing Director R.S. Butola didn't return calls seeking comment. Sinopec's Sinopec International Petroleum Exploration and Production Corp. unit declined to comment.
Colombia is one of the few places Indian and Chinese companies have formed partnerships to buy interests in oil assets. The two large oil-importing economies typically compete for global hydrocarbon assets to secure future supplies.
India signed an agreement with oil-rich Colombia last month, potentially expanding the South Asian nation's role in exploration and production efforts in South America.
The agreement said the countries expected to jointly participate in exploration and production efforts, as well as refining, marketing and liquefied natural gas projects.
Colombia has the fifth-largest oil reserves in South America, with about 1.5 billion barrels of crude reserves and 525,000 barrels of oil production a day.
Mansarovar Energy Colombia Ltd., an equal joint venture company of OVL and Sinopec, holds a 100% interest in the Velasquez property in the Middle Magdalena Basin and in the 189-kilometer Velasquez-Galan pipeline to Ecopetrol's Barrancabermeja refinery, according to OVL's Web site.
Mansarovar also has a 50% interest in the nearby Nare and Cocorna Association contract fields, in which Ecopetrol owns the remaining 50%.
Mansarovar currently produces around 21,500 barrels of oil a day from the assets, according to the Web site.
The firms produce 2,200 barrels of heavy crude a day at Teca though Ecopetrol plans to boost recoverable reserves there using new technologies.
Copyright (c) 2008 Dow Jones & Company, Inc.
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