BPCL buys stakes in 3 blocks abroad

Oil marketing company Bharat Petroleum Corporation (BPCL) has strengthened its upstream presence by acquiring stakes in three exploration oil blocks overseas.

The state-owned company has picked up 25 per cent stake each in two blocks in the North Sea and 20 per cent in another block in the Timor Sea in the Australian offshore.

"We have entered into agreements for exploration blocks with Norwest Energy. The formalities are being completed," the downstream major's spokesperson said.

BPCL has floated a subsidiary called Bharat Petro Resources for upstream acquisitions and operations. The company has an authorised capital of $220 million.

For the 25 per cent stake in the two blocks in the North Sea off the UK coast, BPCL will pay $12.2 million and bear 50 per cent of the cost of the exploratory well being drilled. A study carried out by Norwest indicates the presence of as much as 500 billion cubic feet of gas in the blocks.

The spokesperson said the blocks 48/1b and 2c are in proximity to a number of gas-producing fields and their associated infrastructure makes even moderate gas reserves very commercial.

The two exploration blocks were offered by the UK government to Norwest Energy and Nido Petroleum with 50 per cent participating interest each. Currently, Australian company Encore holds 50 per cent and Norwest 50 per cent in the blocks. Encore is the operator for the blocks.

"The move will give us exposure in the upstream sector in which are very interested," the spokesperson said.

Major part of Europe's oil and gas reserves are concentrated in the North Sea. It is one of the largest non-OPEC producing regions in the world.

In the Timor Sea, BPCL has acquired 20 per cent interest in AC/P32 block in the Browse basin from Norwest's wholly owned subsidiary Westranch Holdings. The agreement is that the Indian company will fund the purchase and reprocessing of new 3D seismic data by paying $1.42 million. In five years, it will have the option of paying 20 per cent of the cost of the second well to be drilled in the block or withdraw from the block. If BPCL decides to stay on then it will have the option of enhancing its stake in the block to 40 per cent by taking on the burden of another 40 per cent of the cost of the second well.

Coogee is the operator for the block with 30.08 per cent stake. Westranch Holdings currently owns 30.1 per cent in the block, which has oil prospects of close to 50 million barrels.