OVL Considers Resuming Operations in Block 20 in Iraq

July 14, 2023

In recent years, Iraq has solidified its position as a major supplier of crude oil to India, strengthening bilateral ties between the two nations. The state-run company, ONGC Videsh Ltd (OVL), is now considering the resumption of operations in its hydrocarbon exploration block in Iraq, which has been under force majeure since 2003. This development comes as India looks to expand its energy partnerships and explore investment opportunities in Iraq’s oil and gas sector.

Iraq: A Major Crude Oil Supplier to India

Iraq has emerged as a significant supplier of crude oil to India in recent times. With its abundant oil reserves and favorable trade relations, Iraq has become a vital source of energy for India’s growing demands. In the fiscal year FY23, Iraq stood as the second-largest exporter of crude oil to India, providing a total of 50.31 million tonnes worth $33.37 billion. This demonstrates the importance of Iraq’s oil supply to India’s energy security and economic growth.

Resuming Operations: OVL’s Exploration Block in Iraq

ONGC Videsh Ltd’s hydrocarbon exploration block in Iraq, known as Block 20 (formerly Block 8), has been under force majeure since 2003 due to security concerns. However, there are now discussions about the possibility of resuming operations in the block. The decision to resume operations will depend on several factors, including the security situation and other aspects that require clarity. OVL’s potential return to the exploration block indicates India’s commitment to expanding its energy investments and strengthening ties with Iraq.

Exploring Investment Opportunities

During the India-Iraq Joint Commission Meeting (JCM) held last month, investment opportunities in Iraq’s oil and gas sector were discussed. The JCM highlighted the mutual desire to enhance cooperation and explore avenues for investment. India expressed its readiness to invest in Iraq’s rehabilitation projects and emphasized the potential for increased quantities of crude oil imports based on appropriate pricing regimes. These discussions reflect India’s intent to deepen its energy engagement with Iraq and pave the way for long-term collaboration.

LNG Terminal Plans and Future Prospects

India is also planning to construct a liquefied natural gas (LNG) terminal in Iraq. The terminal aims to harness Iraq’s gas resources by liquefying the currently flared gas and transporting it to India for various sectors such as city gas distribution, power, fertilizer, and steel. This venture not only contributes to energy diversification but also strengthens the trade and economic cooperation between the two countries.

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