OVL in race to buy massive offshore oil block in Brazil

ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), is among 11 companies in race to acquire Brazil's Libra pre-salt block, one of the world's largest offshore oil discoveries.

OVL is among the companies that paid a 2 million Brazilian reals ($886,014) fee and submitted documents to participate in Brazil's bid round for the massive Libra pre-salt block.

Leading the list are Anglo-Dutch supermajor Shell, France's Total, and Repsol-Sinopec, the joint venture between the Spanish and Chinese players, according to Brazil's National Petroleum Agency (ANP).

The other contenders are Chinese state-run players China National Offshore Oil Corp and China National Petroleum Corp, Ecopetrol of Colombia, Mitsui of Japan, Galp of Portugal and Malaysia's Petronas.

The sale of the offshore field, called Libra, is scheduled for October 21. Libra, the Santos basin block is estimated to hold between 8 billion and 12 billion barrels of recoverable crude oil reserves and covers an area of 1,500 square kilometres.

The prospect is one of the so-called pre-salt oil fields because oil deposits were found buried more than 5,000 metres below the seabed under sand, rocks and a thick layer of salt.

Brazil's national oil company Petroleo Brasileiro, or Petrobras, too figures in the list, according to ANP. It will get a 30% exploration stake in the block if it is operated by a foreign player.

"These companies still need to pass for a qualification process to participate in the auction," the ANP said in a statement.

Winner will have to pay a signature bonus of 15 billion Brazilian reais ($6.35 billion). Winner will be determined by the amount of profit oil, or oil produced after development costs, that companies agree to give the Brazilian government.

The ANP has estimated that it could take as much as 400 billion Brazilian reais to develop Libra over the 35-year life of the concession contract.