ONGC's foreign arm to acquire 12% stake in Brazil block

Deal part of sale of 35% share made by Petrobras which, this August, entered into a deal with Sinochem to sell its 35% interest in block for $1.543 bn

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ONGC Videsh Ltd (OVL), the foreign exploration arm of Oil and Natural Gas Corporation (ONGC), has signed definitive agreements to acquire an additional 12 per cent participating interest in block BC-10 in Brazil. This would increase OVL’s share in the acreage to 27 per cent.

In 2006, OVL had acquired 15 per cent interest in the offshore block in the Campos Basin of Brazil.

The deal is part of the sale of 35 per cent share made by Petrobras which, this August, entered into a deal with Sinochem to sell its 35 per cent interest in the block for $1.543 billion.

The other partners in the block include Shell, which is the operator with 50 per cent stake.

In a press statement, OVL said the acquisition of additional share in the block is subject to approval by the Brazilian anti-trust and regulatory authorities and the agreement was subject to pre-emption rights of the partners Shell and OVL. On September 17, the two companies served a notice to jointly acquire 35 per cent, in which 12 per cent interest corresponds to OVL.

On October 11, in a follow-up to the pre-emption notice, OVL signed sale and purchase agreements with Petrobras for a 12 per cent interest which is likely to cost $529.03 million.

The Block BC-10, also known as Parque das Conchas, includes four offshore deep-water fields — Ostra, Abalone, Argonauta and Nautilus — and a few identified exploration prospects. The block is in the deep-waters of Brazil in the water depths ranging from 1,500 to 1,950 meters and 120 km from Vitoria town on the shore. The licence for the fields expires in December 2032.

In a separate development, OVL has been awarded two onshore blocks, namely B2 (Zebyutaung-Nandaw) and EP-3 (Thegon-Shwegu) in the Myanmar Onshore Bidding Round 2013. Block B-2, having an area of 16,995 sq km, is located in northern Myanmar, bordering Manipur, and the 1,650-sq km Block EP-3 is located in central Myanmar.

OVL has a decade-old presence in the exploration and production sector of Myanmar, with 17 per cent non-operating stakes in the fields Shwe & Shwe Phyu (Block –A1) and Mya North & Mya South (Block A3), with a total investment of $565 million as on September 30. Myanmar is one of the focus countries for OVL.