Oil and Natural Gas Corp (ONGC), India's largest oil producer, has signed an agreement with Petrobras of Brazil for cooperation in oil and gas exploration.
ONGC Videsh Ltd, the overseas arm of ONGC, signed a memoradum of understanding (MoU) with Petrobras at the Presidential Palace in Brasilia, the Brazilian capital on Tuesday, a company release said in New Delhi.
The MoU was signed by RS Sharma, Chairman OVL and ONGC Group of Companies, and Jose S Gabrielli De Azevedo, President and CEO of Petrobras in the presence of Prime Minister Manmohan Singh and President Luiz Incacio Lula da Silva of Brazil.
OVL and Petrobras would jointly pursue exploration and production opportunities in India, Brazil and third countries.
"The MoU encompasses strategic cooperation and participation in the exploration and production of hydrocarbon resources on-land as well as in shallow and deepwater areas," it said.
In April, OVL acquired 15 per cent equity in Block BC-10, located on the prolific Campos basin in Brazil's deepwaters for $410 million. Shell is the block operator, holding a 50 per cent participating interest, while Petrobras holds the remaining 35 per cent stake.
"The block is currently under development and production is scheduled to commence in the last quarter of 2009, with OVL's equity share at peak production expected to reach about 1 million tonnes per annum," it said.
OVL Managing Director RS Butola said, "This MoU is the first step in a strategic collaboration that will play an important role in other South American, Indian and third country opportunities, providing a technology transfer and knowledge alliance between our countries' strongest oil companies."
Block BC-10 block is located at about 1,800 metres under water, 120 km off the Brazilian coast, and hosts eight exploration and five appraisal wells drilled to date. Initial studies suggest a substantial estimated recoverable reserve of oil and gas over the producing life of the field.
BC-10, OVL's first venture in South America, calls for an upfront investment of about $410 million, including the acquisition consideration, plus an upside capex.