OVL to have 15% stake in Brazil oilfield

By agencies   |   Thursday, 06 April 2006, 07:00 Hrs
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NEW DELHI: ONGC Videsh Ltd (OVL), the overseas arm of exploration major Oil and Natural Gas Corporation, is set to soon acquire 15 percent equity stake worth $400 million in an oilfield in Brazil.

With this OVL is set to add another overseas asset to its kitty of stake in 13 properties spread across a dozen countries, including Russia, Sudan and Myanmar.

The company’s plan is to acquire ExxonMobil's 30 percent stake in the Brazilian oilfield in Campos Basin. But this had run into some problem with Royal Dutch/Shell, the operator of the field with a 35 percent stake, deciding to exercise its pre-emptive rights to the stake sale.

Brazil's state-owned Petrobas, which also holds 35 percent stake in the field, has however decided to forgo its pre-emptive rights in favor of OVL, paving way for its entry into the South American country.

According to the official statement of the company, “With Petrobas having agreed to forego its rights in OVL's favor, the process is now on for Shell to first acquire ExxonMobil's stake. In turn, Shell will be transferring 15 percent stake to OVL in a $400 million plus transaction.”

"The deal is expected to be signed soon, possibly next week. The Campos Basin BC-10 field is a discovered oilfield," a senior ministry official said.

In December, OVL had got the approval of the Cabinet Committee on Economic Affairs (CCEA) to invest $820 million in the Brazilian field BC-10 for acquiring 30 percent stake. But now the deal is set to be of a much lower value.

The Indian investment in Brazil is likely to see further attempt by Petrobas to enter exploration activities in India through participation in the latest round of 55 exploration blocks offered for bidding. In the earlier round (NELP-V), Petrobas had failed to make the mark, official sources said.

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