Business
ONGC says to buy Exxon's 30 pct in Brazilian field
January 30, 2006
MUMBAI (Reuters) - State-run Oil and Natural Gas Corp. Ltd. has struck a deal with ExxonMobil Corp. to buy the oil major's 30 percent stake in Brazil's "Project Sugar Loaf", a company spokesman said on Monday.
"Our offer has been accepted by ExxonMobil and we are now working out the nitty-gritties of the deal," the spokesman said, confirming a newspaper report.
A company source said the deal was worth $1.4 billion.
The spokesman said ONGC was awaiting a formal approval from the Brazilian government.
"We expect the deal to be finalised in couple of weeks," he said, adding that this was ONGC's second biggest acquisition after a $2.7 billion investment in Russia's ExxonMobil operated Sakhalin-I project, in which ONGC has a 20 percent interest.
He said the leading domestic explorer had also initiated negotiations with Exxon's partners in block BC-10 -- Royal Dutch Shell and Brazilian state company Petrobras -- seeking their approval for the acquisition.
"Both these companies have pre-emption rights to the deal and we are talking to them for including us as a partner," the spokesman said.
Last month, the Indian government had cleared ONGC's investment of up to $820 million for the deal.
The government had said the purchase would include paying $330 million to buy ExxonMobil's Brazilian subsidiary and $490 million as cash calls for its share of the project's cost, appraisal and further exploration.
ONGC already has interests in Sudan, Libya, Myanmar, Iran, Iraq, Syria, Russia and Ivory Coast.
India is keen to buy more oil assets abroad to ensure steady supply as its growing economy consumes increasingly more energy.
The country's newly appointed oil minister Murli Deora, who took charge on Monday, said he would continue to steer India's strategy of ensuring supplies and energy security for Asia's third largest economy.
ExxonMobil holds interests in two offshore blocks in Brazil's prolific Campos Basin, with a 30 percent stake in block BC-10, in which an oil discovery has been made with possible reserves of 400 million barrels. Block operator Shell aimed to declare it commercially viable this year.