Videocon, BPCL JV with Petrobras strikes oil in Brazil

Oil field estimated to hold more than a billion barrels of oil; will be a game changer for Videocon, BPCL JV

A joint venture between Videocon Industries and BPCL has found more than a billion barrels of oil in a field off the Brazilian coast.

Government-owned Brazil Petroleo Brasileiro SA and IBV Brasil, a 50-50 joint venture between Bharat Petroleum Corporation (BPCL) and Videocon Industries Ltd, have found that "SEAL-11" exploration block contains very large amounts of high-quality light crude oil and natural gas.

The field, with $12 billion of oil reserves, is good news for the investors of BPCL and Videocon even as share price of both companies shot up on the Bombay Stock Exchange on Friday. During the afternoon trades, Videocon was up 8.5% to Rs 184 a share while BPCL was up to Rs 336 a share.

“This is the biggest overseas find by any Indian company and it will propel Videocon and BPCL to become one of world’s biggest oil producing companies,” said an oil analyst. IBV owns 40% stake in the block – which is one of the biggest global discoveries of the year.

When contacted, Videocon Chairman VN Dhoot declined to comment on the issue. But sector analysts say the SEAL-11 may hold more than 3 billion barrels of oil in place. The exact numbers will only be known once appraisal plans are completed in the next two years.

For Videocon, the oil find in Brazil is a game changer as it transforms the group from a consumer durables company to an oil giant. Just few months ago, it announced sale of its Mozambique gas field to Indian government-owned OVL and Oil India for close to $2.5 billion. Post its exit from Mozambique field, the company is now focusing on Brazil which holds huge oil reserves.

In an earlier interview, Dhoot had said the company will now endeavor to emerge as a major player in the global oil and gas industry.

“We have created huge and unprecedented value in our entire exploration portfolio built tirelessly over the last seven years globally, ranging from Brazil to Indonesia to Timor and Australia. Mozambique is a small portion of the total pie of reserves and potential reserves our 12-14 prolific blocks show. We are explorers at heart and hence we will continuously look at opportunistic portfolio reshuffle of our assets and buy new assets in exploration and also venture into producing blocks across the globe in new frontiers like we have in the past and further build on the success we have already achieved,” he had said.

Today, Videocon is globally recognized in this field and shares a seat with amongst the world’s largest oil companies in oil exploration and hence opportunities come to us more easily than they did five years back, he said.

“We will continue to focus aggressively on our existing oil assets globally, which have a proven recoverable potential of over 2 billion barrels of oil as of today and a lot more to look forward to with new exploration targets there, especially in Brazil,” Dhoot had said.