It is reported that ONGC Videsh Ltd the overseas arm of Indian state owned Oil and Natural Gas Corp is likely to invest USD 1.45 billion in an oil block in Iraq.

An OVL official said that “The service exploration and production contract for Block-8 have been concluded and the agreement is likely to be signed in the next couple of months.”

Block-8, located in the western desert in southern Iraq bordering Saudi Arabia was awarded to OVL in November 2000 by the then Saddam Hussein government. However, the government formed after the US invasion of the oil rich country, sought re negotiation of the contract which has now been concluded. The block already has a discovery and is estimated to hold 645 million barrels of reserves of which 54 million are recoverable.

The repot said that OVL has committed investing USD 86 million in two phases of exploration and USD 1.45 billion in development of the reserves thereafter.

The report added that the contract would be a service contract wherein OVL will be paid about 18% rate of return on its investment.