ONGC, ENI to trade stake in blocks

Oil and Natural Gas Corporation (ONGC) is set to enter into a swap deal with Italy's ENI. Under the deal, ENI will offer ONGC 35 per cent stake in a deepwater oil block in Congo, while ONGC will offer the Italian company a similar stake in its offshore block in the Mahanadi basin 35 km off the coast of Orissa.

The stake in the Congo block will be picked up by ONGC's overseas investment arm, ONGC Videsh (OVL). The deal could be signed as early as on Wednesday between OVL Managing Director RS Butola and ENI Chairman Roberto Poli.

"The deal will be signed on February 14 in Mumbai. The block in Congo is an exploration one," ONGC's Director (Exploration) DK Pande said.

ONGC's acting chairman and managing director RS Sharma had said at Bhubaneshwar during the weekend that gas has been discovered in the Mahanadi block and an estimate of the reserves would be complete in six months.

He had said that production from deepwater blocks was a technological challenge and the company was in talks with ENI and Brazil's Petrobras for exploitation of the reserves.

ONGC and ENI had entered into an agreement for deepwater exploration in India and abroad in September 2005, which provided for exchange of equity interests in select licences. "The present deal is a part of that agreement," Pande said.

The two companies have also jointly won exploration blocks under the New Exploration and Licencing Policy (NELP).

The companies had secured two exploration blocks "� one in Rajasthan and the other in the Andaman deepwater "� during the fifth round of auction under NELP.