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OVL blocks Chinese bid, to buy
stake in Brazilian oilfield
PTI | Sep 18, 2013, 12.27PM IST
NEW DELHI: In a first by an Indian
firm, ONGC Videsh Ltd (OVL) has
exercised its pre-emption rights to
block China's Sinochem Group from
buying 35% interest in a Brazilian
oilfield for $1.54 billion.
OVL, the overseas arm of state-owned
Oil and Natural Gas Corp (ONGC), in
collaboration with Royal Dutch Shell
will buy the 35% stake in block
BC-10, known as Parque das
Conchas, that Brazil's Petrobras had
planned to sell to Sinochem, sources
with direct knowledge of the
development said.
While the Indian firm will pick up
12.08% stake, the remaining 23%
will go to Shell.
Sources said OVL-Shell, who by virtue
of their existing stake in BC-10 had a
first right of refusal or pre-emption
when fellow participants offer stakes
for sale, have informed Petrobras
about their decision.
OVL currently has a 15% stake in the
block which is entitled for an extra
8% taken from the 35% stake being
sold by Petrobras. Shell is the
operator with 50% share.
But, OVL manged 12.08% after
convincing Shell to take a smaller
than its entitled stake, sources said.
OVL managing director D K Sarraf
declined to comment citing
confidentiality in the joint operating
agreement (JOA).
This is the first time an Indian firm
has exercised pre-emption rights to
block the sale of an oilfield stake to
a Chinese firm.
Petrobras is shedding non-core
assets to help finance a $237-billion,
five-year investment plan. Last
month, it agreed to sell its stake in
block BC-10, known as Parque das
Conchas, in Brazil's Campos Basin,
for $1.54 billion to Sinochem Group.
OVL, a few weeks back, lost out on
acquisition of US energy major
ConocoPhillips' 8.4% stake in
Kazakhstan's giant Kashagan oilfield
for $5 billion.
Kazakhstan first exercised its pre-
emption right to block the OVL deal
and then sold the 8.4% stake to
China National Petroleum Corp
(CNPC).
India has lost at least $2.5 billion of
deals to China in past years.
OVL had acquired 15% stake in
BC-10 in April 2006 for $165 million.
Additionally, its share of cost of
developing field is $748.05 million,
of which $383 million has already
been spent. The first two phase of
the project are estimated to cost $
4.987 billion (OVL's share of 15%
bring $748.05 million).
The BC-10 block off Brazil lies in
ultra-deep water of 2,000 metres and
began production in 2009. The Ostra
field in the block pumps about
21,000 barrels per day of oil.
A second-phase development is
expected to start by the end of this
year, with a peak production of
35,000 barrels of oil equivalent per
day.
"When Petrobras put its 35% stake
in BC-10 for sale, OVL evinced
interest but for strategic reasons did
not place a bid," a source said.
Shell too did not put a bid for the
stake and unlike OVL, it did not even
visit the dataroom Petrobras had set
up to lure potential buyers.
source= timesofindia
stake in Brazilian oilfield
PTI | Sep 18, 2013, 12.27PM IST
NEW DELHI: In a first by an Indian
firm, ONGC Videsh Ltd (OVL) has
exercised its pre-emption rights to
block China's Sinochem Group from
buying 35% interest in a Brazilian
oilfield for $1.54 billion.
OVL, the overseas arm of state-owned
Oil and Natural Gas Corp (ONGC), in
collaboration with Royal Dutch Shell
will buy the 35% stake in block
BC-10, known as Parque das
Conchas, that Brazil's Petrobras had
planned to sell to Sinochem, sources
with direct knowledge of the
development said.
While the Indian firm will pick up
12.08% stake, the remaining 23%
will go to Shell.
Sources said OVL-Shell, who by virtue
of their existing stake in BC-10 had a
first right of refusal or pre-emption
when fellow participants offer stakes
for sale, have informed Petrobras
about their decision.
OVL currently has a 15% stake in the
block which is entitled for an extra
8% taken from the 35% stake being
sold by Petrobras. Shell is the
operator with 50% share.
But, OVL manged 12.08% after
convincing Shell to take a smaller
than its entitled stake, sources said.
OVL managing director D K Sarraf
declined to comment citing
confidentiality in the joint operating
agreement (JOA).
This is the first time an Indian firm
has exercised pre-emption rights to
block the sale of an oilfield stake to
a Chinese firm.
Petrobras is shedding non-core
assets to help finance a $237-billion,
five-year investment plan. Last
month, it agreed to sell its stake in
block BC-10, known as Parque das
Conchas, in Brazil's Campos Basin,
for $1.54 billion to Sinochem Group.
OVL, a few weeks back, lost out on
acquisition of US energy major
ConocoPhillips' 8.4% stake in
Kazakhstan's giant Kashagan oilfield
for $5 billion.
Kazakhstan first exercised its pre-
emption right to block the OVL deal
and then sold the 8.4% stake to
China National Petroleum Corp
(CNPC).
India has lost at least $2.5 billion of
deals to China in past years.
OVL had acquired 15% stake in
BC-10 in April 2006 for $165 million.
Additionally, its share of cost of
developing field is $748.05 million,
of which $383 million has already
been spent. The first two phase of
the project are estimated to cost $
4.987 billion (OVL's share of 15%
bring $748.05 million).
The BC-10 block off Brazil lies in
ultra-deep water of 2,000 metres and
began production in 2009. The Ostra
field in the block pumps about
21,000 barrels per day of oil.
A second-phase development is
expected to start by the end of this
year, with a peak production of
35,000 barrels of oil equivalent per
day.
"When Petrobras put its 35% stake
in BC-10 for sale, OVL evinced
interest but for strategic reasons did
not place a bid," a source said.
Shell too did not put a bid for the
stake and unlike OVL, it did not even
visit the dataroom Petrobras had set
up to lure potential buyers.
source= timesofindia
