Petrobras to tie up with ONGC for exploration

Brazilian oil major Petrobras could finally be entering India. The company, with expertise in deepwater hydrocarbon exploration, is likely to enter into an agreement with Oil and Natural Gas Corporation (ONGC) to jointly explore and evacuate the latter's gas from its recent finds in the ultra deepwater block in the Krishna Godavari basin.

Petrobras was widely expected to bid during the last auction of exploration blocks dubbed NELP VI. The Brazilian company now seems to be on the verge of putting its stakes in a proven reserve.

ONGC has discovered a 30 metre gas-bearing zone in the KG basin at a depth of 5,300 metres in the Bay of Bengal.

It is currently drilling another 1,000 metres to ascertain the extent of its gas find. Initial estimates indicate reserves of 22 trillion cubic feet (tcf), the largest in the country so far.

Sources in ONGC said the company would be in a position to declare the proven probable gas reserves by the middle of next month.

"Petrobras has the kind of expertise needed to explore and evacuate gas from ultra deep water and we are actively looking at a tie-up with them for our KG basin block," a senior ONGC executive said.

The two companies are expected to sign a wider memorandum of understanding (MoU) which will include exploration and evacuation of gas from the KG-DWN-98/2 block.

"Just one well has been drilled so far. We will have to drill another five wells in the block. At those depths we will need the expertise and experience of Petrobras," the executive said.

ONGC, through its overseas arm ONGC Videsh (OVL) and Petrobras also own an oil block in Brazil's Campos basin. Shell is operator of the field with a 50 per cent stake, while Petrobras owns 35 per cent and OVL 15 per cent.

Reliance Industries has also found oil and gas in its D-6 offshore block in the area at a depth of 3,580 metres. ONGC's discovery is almost 3,000 metres deeper.

ONGC already has agreements with steel magnate Lakshmi Mittal, the Hindujas and global energy major Royal Dutch Shell for cooperation all along the hydrocarbon chain.

While the agreement with Mittal has resulted in the two jointly picking up oil blocks in Nigeria, the ones with the Hindujas and Shell have not borne fruit so far.