India's state-run Oil and Natural Gas Corporation (ONGC) has said budgeted to invest between $25 billion and $30 billion over the next ten years in an attempt to considerably expand its overseas oil and gas asset base.

The announcement by ONGC heralds a new, more proactive overseas strategy by the Indian government. While neighbouring China has been busy securing both headlines additional resources from abroad - owing to its concern over flattening production from current domestic and overseas operations - India's outbound energy acquisitions have been left some way behind.

India produced just 766,000 barrels per day (bpd) of oil in 2008 while it imported 2.1 million bpd, according to the BP Statistical Review of World Energy published in June 2009. The nation's reliance upon imports oil to help feed escalating energy demand in the local market is something th government now seems eager to address.

As India will be unable to meet its growing domestic demand in the short-term it is going to require more foreign sources of production, particularly as output from existing assets is disappointing. In fact, ONGC's overseas investment vehicle, ONGC Videsh (OVL), has been experiencing declining crude production from its Sudanese and Russian projects which is likely to result in flat output for 2010. The aforementioned investment of $25-30 billion is set to be used directly to boost OVL's production.

At present, the company currently has cash resources of $3 billion but would begin borrowing as part of a more aggressive financial strategy to invest in new projects. The Indian government also said that it would create an investment fund to encourage Indian companies to build up foreign energy assets.

OVL indicated earlier this year that it is seeking out new overseas projects. As recently as February 11, it was part of a consortium including the likes of Spain's Repsol YPF, and Malaysia-based Petronas, that was awarded development rights at the Carabobo 1 block in Venezuela. OVL also signed an exploration pact with Angola's Sonangol to explore in Angola late last month. OVL illustrated its desire to stay active in the country by offering to put forward a joint-bid with the company in Angola's next auction round.

Tags: ONGC