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Our Bureau

Both companies will get stakes in each other's blocks

New Delhi June 4 Brazilian oil major — Petroleo Brasileiro S.A. (Petrobras) — will now get participating interest in exploration blocks of ONGC in India and ONGC, in turn will get to participate in oil blocks being explored by Petrobras in Brazil.

This reciprocating of interests in offshore oil and gas blocks of the two companies will come about in view of an agreement reached here on Monday over swapping of interests in offshore blocks in India and Brazil.

ONGC's deepwater blocks, where Petrobras could hold stake include those in the Krishna-Godavari Basin, off Andhra Pradesh coast, and the Mahanadi Basin off Orissa coast. Petrobras has offered 25-30 per cent stake to ONGC in three exploration blocks and, in return, ONGC has offered 15-40 per cent stake in its three deep-water blocks. Preliminary agreement on these deals will be signed shortly.

`Strategic country'

According to a statement issued by ONGC, the agreement was signed today by Mr R.S. Sharma, Chairman, ONGC group of companies; Mr R.S. Butola, Managing Director of ONGC Videsh Ltd (OVL) and Mr Jose Sergio Gabrielli De Azevedo, President of Board of Directors of Petrobras, in the presence of the Prime Minister, Dr Manmohan Singh and the visiting Brazilian President, Mr Luiz Inácio Lula da Silva. Speaking on the development, the President and CEO of Petrobras said, "India has always been a strategic country for us."

Mr Butola, Managing Director, OVL, and a signatory to the agreement, said, "Brazil is an important element of our global growth strategy. We believe that an increased interest in the area is attractive and re-confirms our commitment to growth in Brazil."

Earlier, Petrobras had accommodated the Indian company by waiving its right of pre-emption in the offshore block BC-10 in favour of OVL and a 15 per cent interest in the block was transferred to ONGC Videsh. Thereafter, the companies had entered into a MoU to jointly participate in the oil and gas exploration in Brazil, India and third-world countries. Monday's agreement is a first step towards the strategic partnership.

Using expertise

The ONGC Chairman, Mr Sharma, said, "We look forward to partnering with Petrobras, one of the most renowned companies in deepwater operations. We strongly believe that the expertise of Petrobras in deepwaters will be utilised in the development of our offshore blocks in India."

Later in the day, the Petroleum Minister, Mr Murli Deora, called on the Brazilian President and discussed the potential for collaboration and cooperation between the two countries. He also requested for expediting action on the issues of joint collaboration for which an MoU was signed between OVL and Petrobras on September 12, 2006.

This will lead to joint participation by ONGC/OVL and Petrobras for acquiring Exploration and Production (E&P) assets in Brazil, India and third countries. The Minister also requested for a collaboration with Brazil on ethanol blended petrol for better technology gain from Brazil's experience and expertise in the field.

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