Cabinet raises investment by OVl, GAIL in Myanmar
18 February 2010
The cabinet committee on economic affairs today approved the ONGV Videsh Limited's (OVL's) additional investment up to $832.54 million in oil its project in Myanmar.
This will enable the overseas arm of oil major ONGC to raise its investments in the project to $1006.39 million
OVL can now acquire a 20 per cent participating interest in upstream oil development for which it will pay $664.7 million and and an 8.35 per cent interest in onshore midstream project, PIPECO-2, for another $167.84 million. OVL expects the two investments to yield an internal rate opf return of 12.53 per cent and 15.5 per cent, respectively.
The approval clears ONGC's proposal to provide financing and guarantee support for additional investment by OVL in the project for the entire $832.54 million.
Simultaneously, the cabinet has also granted an exemption to GAIL from the public investment board route and extending it the ECS mechanism, as available to OVL, for investments for GAIL's share of investment for a 10 per cent participating interest in the Myanmar gas development and a 4.1 per cent share in PIPECO-2 projects.
GAIL's investments for this project are $502.06 million of which $361.39 million s for the upstream development project and past investment of $56.79 million for exploration and appraisal for a 10 per cent interest.