ONGC Videsh Ltd (OVL), the overseas arm of oil & gas exploration major ONGC, through its affiliates, has signed definitive agreements to acquire additional 12 per cent participating interest (PI) in Block BC-10, Brazil as part of stake sale initiated by local energy giant Petrobras, for $529.03 million, as per a stock market disclosure.
OVL had earlier acquired 15 per cent stake in the block in 2006. The other partners in the block include Shell and Petrobras with 50 per cent and 35 per cent stake respectively.
Petrobras kicked off its plan to exit the block sometime back and entered into a deal with China’s Sinochem to sell its 35 per cent interest in the block for $1.543 billion in August. This was subject to pre-emption rights by the other 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 will be held by OVL.
The Block BC-10 (also known as Parque das Conchas) is in Campos Basin of Brazil and includes 4 offshore deep water fields- Ostra, Abalone, Argonaula and Nautilus. 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.
OVL had picked the 15 per cent stake in the block for $170 million in 2006 which means the value of the block has already climbed four times since then.
This is the third significant deal by OVL to raise its overseas exposure in the last four months. In August this year, OVL had signed a definitive agreement to buy Anadarko Petroleum Corporation's 10 per cent stake in Rovuma Area 1 Offshore Block in Mozambique for $2.64 billion.
This came within weeks of the firm joining hands with another public sector energy major Oil India Ltd (OIL) to acquire Videocon Industries’ 10 per cent participating interest in the same block in Mozambique for $2.475 billion. The acquisition is to be implemented via a newly incorporated special purpose entity in which OVL and OIL are expected to hold 60 and 40 per cent stake, respectively.
With the latest deal, OVL has committed over $4.1 billion to raise its holding in the blocks in Mozambique and Brazil since June this year.
In one setback, OVL’s proposed $5 billion bid to acquire ConocoPhillips' 8.4 per cent stake in Kashagan oilfield in Kazakhstan has come unstuck as the government of Kazakhstan has pre-empted its bid to pick the stake. Last November, OVL had signed the definitive agreements with ConocoPhillips to buy its stake in the Kashagan for around $5 billion.
Meanwhile, OVL has also been awarded two onshore blocks named B2 (Zebyutaung-Nandaw) and EP-3 (Thegon-Shwegu) in the Myanmar Onshore Bidding Round 2013.
Currently, OVL participates in 32 projects in 16 countries and is producing 160,000 barrels of oil and oil equivalent gas per day and has a total oil and gas reserves of about 433 mmtoe as on March 31, 2013.