ONGC Videsh To Unveil Sakhalin-I Cost Overrun this Month

ONGC Videsh Ltd is expected to increase its investment for acquiring stake in Sakhlin-I in Russia. "The company is working on the estimates. But a cost over run is there," Petroleum Ministry sources told UNI. In next few days, we expect OVL to inform the ministry in this regard, he said.

The Cabinet in February 2001 allowed OVL to acquire 20 percent stake held by Rosneft in Sakhalin-I for $1.74 billion. In November last, the Empowered Committee of Secretaries asked OVL to re-evaluate its investment at Sakhalin-I using outside consultants. OVl hired investment bank JP Morgan London; UK-based energy advisor Gaffney, Cline and Associates; and the US law firm of Akin, Gumb and Strauss to rework the investment plan in Sakhalin-I.

The three also helped OVL in due diligence of the Russian field before acquiring a stake. The three consultants are believed to have advised OVL to pay an increased cost for a stake in the field, considered to have the world's richest oil and natural gas reserves.