Videocon and BPCL find more oil in Brazil's Sergipe Basin

The firms plan to start producing oil from the area in 2018

Bharat Petroleum Corporation (BPCL) and Videocon Industries with Brazilian partner Petroleo Brasileiro SA (Petrobras) have found more light crude oil in the Sergipe Basin off that country’s northeast coast, the companies said in a securities filing.

The discovery in the BM-SEAL-11 exploration block is believed to hold at least a billion barrels of recoverable oil. Petrobras owns 60 per cent of BM-SEAL-11 and is the operator. IBV Brasil SA, an equal joint venture between Videocon and Bharat Petro Resources Ltd (BPRL), upstream arm of BPCL, owns the rest.

After the announcement, Videocon’s shares rose 20 per cent but BPCL’s was flat.

“The discoveries also include natural gas,” said the securities filing. The companies plan to start producing oil in the area in 2018.

The BM-SEAL-11 block is the biggest new oil offshore frontier in Brazil, after discoveries in the Santos Basin (south of Rio de Janeiro) were announced in 2007.

While BPCL has established itself in the exploration and production segment with a Mozambique gas find, analysts said the new development could be a game-changer for Videocon, taking it from a consumer durables company to a significant exploration and production entity.

Last year, Videocon sold its Mozambique gas field to Indian government-owned ONGC Videsh and Oil India for close to $2.5 billion. After its exit from Mozambique, the company focused on Brazil.

BPCL plans to invest Rs 13,000 crore in energy exploration and production in Mozambique and Brazil over the next four years, the company had said in September 2014.

“After the appraisal (study) of the Segipe-Alagoas basin is completed in Brazil, the final investment figure will be known but we estimate (it) at around Rs 3,000 crore approximately,” D Rajkumar, managing director and chief executive officer of BPRL had said in September 2014.