ONGC Videsh Expects Syria, Sudan To Hit Fiscal Year Crude Output - Fox Business

NEW DELHI –  ONGC Videsh Ltd., the overseas investment arm of state-run Oil & Natural Gas Corp. (500312.BY), is targeting lower crude-oil output this fiscal year due to production shutdowns at its assets in Syria and South Sudan.

Reduced output at OVL could hurt earnings at ONGC, India's flagship oil and gas explorer, whose bottom line is eroded by a government requirement to sell crude oil at discounted rates to state-run refiners. The proceeds from OVL's output usually offset domestic losses, as its earnings on crude oil and gas aren't capped.

OVL is targeting crude-oil output of 6.21 million tons, or about 124,700 barrels a day, and natural gas production of 2.39 billion cubic meters in the year that began April 1. The explorer, which has assets in 15 countries, had set a production target of 6.50 million tons of crude oil, or 130,200 barrels a day, and 2.25 billion cubic meters of gas last year, it said in a statement on its website.

The explorer didn't provide actual production for 2011-12.

South Sudan and Syria accounted for about 40% of the company's output in 2010-11.

South Sudan shut its crude-oil production in January after tensions rose with Sudan due to a longstanding dispute over oil transit fees. South Sudan seceded from Sudan last summer, retaining at least 75% of the separate nations' combined oil fields, but it lacks the infrastructure to export oil other than via pipelines that run through Sudan.

OVL's production in Syria, where it holds a stake in the Al-Furat project in partnership with China National Petroleum Co., Syrian Petroleum Co. and Royal Dutch Shell PLC (RDSB.LN), was suspended after Shell pulled out of Syria following European Union sanctions on the regime of Bashar al-Assad.

OVL didn't say as to when it expects normal production to resume in either Syria or Sudan.

OVL forecast net profit of INR43.33 billion on gross sales of INR211 billion for 2012-13. It hasn't yet announced its financial results for 2011-12. The financial targets are based on an average Brent crude-oil price of $100 a barrel and exchange rate of INR49 to a dollar.

ICE Brent crude for May delivery was trading around $124.50 a barrel Tuesday.

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