The Hindu Business Line : ONGC invites Petrobras to invest in refining ventures

The Chairman and Managing Director of ONGC, Mr Subir Raha, said here on Thursday that ``we have plans for building a few grassroots refineries. We invite Petrobras to take equity in these projects. We feel co-operation with Petrobras will enhance our technical ability, as they have recognised excellence in ethanol technology.''

Mr Raha, however, did not comment on which projects would be offered to Petrobras for investment but only said opportunities were available for exploitation.

Speaking at a conference to announce the entry of ONGC Videsh Ltd (OVL), the overseas arm of ONGC, into Brazil by picking up 15 per cent stake in an oil field in that country, Mr Raha said, besides Petrobras participation in India, ONGC would also look at working together with the Brazilian company in third countries.

Hiking refining capacity

ONGC has plans to increase its refining capacity to 45.9 million tonnes (mt) a year from the current 10 mt by the fiscal ending March 2010. For this, the company is building new refineries and expanding the capacity of its Mangalore refinery. It has also proposed building a refinery in Andhra Pradesh and Rajasthan.

OVL to pay $170 m

ONGC Videsh will pay about $170 million for buying a 15 per cent stake in a Brazilian oil field from Royal Dutch/Shell. The OVL Managing Director, Mr R.S. Butola, said that his company would spend another $234 million as its share of the cost involved in bringing the field to production by the end of 2009.

OVL had originally bought ExxonMobil's 30 per cent stake in BC-10 for $330 million. It had committed another $490 million as its share of development cost. However, Shell, as the operator of the block, had the first right of refusal on any stake sale in the venture by partners. It exercised its pre-emption right and now, OVL is buying half of that stake, he explained. OVL and Shell inked the shareholders agreement, which assigned 15 per cent stake in BC-10 to the former.

While Shell would remain the operator of the field with a 50 per cent stake, Petrobras will own the remaining 35 per cent and OVL 15 per cent. Mr Butola said the field holds 400 million barrels of oil reserves and has potential to produce 100,000 barrels per day. Stating that OVL is looking forward to future opportunities in Brazil, he said that his company is planning to bid for oil and gas blocks offered under the latest round of auctions in Brazil, which is open till November.

No case for bonus

Mr Raha said there was no case for bonus shares as the company's equity base was already very large.

``I don't think there is a case for issue of bonus shares as our equity base is already vary large and such a move would reduce earnings per share,'' he told newspersons at the sidelines of a conference.

Asked whether the company has received any instruction from the Finance Ministry to consider stock split and bonus issues, Mr Raha said the company had not received any instruction.

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