OVL will acquire 15% in Brazilian block

Shell to give up part of stake bought from Exxon to ONGC arm.

NEW DELHI: ONGC Videsh will acquire 15% participating interest in the BC-10 block in a Brazilian offshore field. The block was declared commercial in December 2005, after six discoveries were made.

Shell Brasil Exploration & Production would acquire an additional 30% participating interest in the block from Exxon Mobil, out of which 15% would be given to OVL, and Petrobras, the other partner, waiving its pre-emption rights, said a Shell release.  The entire transaction with Exxon Mobil is considered to be around $1.4 billion, said sources.

The transaction increases Shell’s equity interest while bringing ONGC into the joint venture partnership. Shell will remain the operator. The two companies will sign documents related to the changes in BC-10 shareholdings, which will stand at Shell (50%), Petrobras (35%) and OVL (15%), once the transaction has been completed and approved by Brazil’s National Petroleum Agency.

A memorandum of understanding to this effect would be signed in New Delhi on Thursday. Shell is a leading player in offshore Brazil, with production from the Shell-operated Bijipurá and Salema fields and interests in 14 exploration blocks.

Technical and commercial studies are under way for the development of resources in BC-10, with the potential for production of around 100,000 barrels of oil per day.