OVL buys 12% more stake in Brazilian block for $561 mn

New Delhi: ONGC Videsh Ltd (OVL) on Tuesday said that it has acquired an additional 12 per cent participating interest in Brazil’s deepwater offshore block, Block BC-10. Post the deal, the Indian explorer’s stake in the acreage would be 27 per cent.

OVL and Shell (operator of the block) exercised their pre-emption rights to buy additional stake from Petrobras.

“OVL has paid a purchase consideration of $561 million for 12 per cent stake in the block,” the public sector explorer said in a statement. Now, Shell, the operator of the block, holds 73 per cent stake.

In 2006, OVL had acquired 15 per cent participating interest in the block located in Campos Basin of Brazil.

Earlier, Petrobras had 35 per cent stake in the block. In August 2013, Petrobras had entered into an agreement with Sinochem for the sale of its 35 per cent stake in the block.

Pre-exemption rights

This agreement was subject to pre-emption rights of the partners. Shell and OVL exercised their pre-emption rights for the acquisition of 23 per cent and 12 per cent participating interests, respectively.

On approval of the Brazilian regulatory authorities for acquisition, the transaction has been completed on December 30, OVL said.

The block BC-10 includes four offshore deepwater fields — Ostra, Abalone, Argonauta and Nautilus and a few identified exploration prospects.

Oil production

The project is being developed in three phases. Production from the first phase had started in 2009. The second phase came on stream in October 2013 with an expected peak production of about 35,000 barrels of oil equivalent per day (boepd) in 2014.

Currently, oil production from the block is about 50,000 boepd. The third phase is to come on stream in 2016 with an expected peak production of about 28000 boepd in 2017. Production from all the phases is expected to be about 75,000 boepd in 2017.