OVL to buyout Exxon Mobil stake in Brazil

NEW DELHI: In a bid to intensify the campaign for energy security, the UPA Government has allowed ONGC’s overseas arm, OVL late last week to invest US $ 820 million to pick up 30 percent participating stake in Brazil’s oil field.

OVL will make this investment to buy out 30 percent participating stake held by international oil major, Exxon Mobil in the BC-10 project in Brazil which is an oil and gas block located in the Campos basin about 120 kms southwest from the City of Vitoria off the Brazilian coast.

Sources divulged that others holding interest in this block are Petrobras with 35 percent and Shell with another 35 percent as the operator.

It is learnt that OVL has outbid other international oil companies in cornering Exxon Mobil stake in the oil field.

Out of the 30 percent stake held by Exxon Mobil, OVL has already acquired 15 percent for US $ 410 million in April last year. The latest decision is to take over the remaining 15 percent from Exxon Mobil.

The major investment being made by OVL will ensure the state-owned oil major to earn a 10 percent internal rate of return (IRR).

Exxon decided to sell its stake in Brazilian oilfield as it had decided to exit from “its upstream presence” in that country.

Other major companies operating in the development and exploration of oilfields in Brazil include BP, Chevron-Texaco, Shell, ENI, Statoil, Repsol, Amerada Hess and Devon.

However, Brazilian state-owned oil company, Petrobras has control over 95 percent of country’s oil and gas assets while the foreign companies holding little over 3.6 percent.

Brazil produces 2.3 million barrels of oil per day and it is likely to go up to 3.4 million barrels in next three years.