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Financial Times: ONGC to buy stake in Brazil oilfield

By Khozem Merchant in Mumbai
Published: January 31 2006
India’s state-owned Oil and Natural Gas Corporation has agreed to pay $1.4bn to buy ExxonMobil’s 30 per cent stake in a field in Brazil’s Campos Basin, securing its first asset in the region after a string of setbacks.
ONGC officials say its offer has been approved by the Indian government.
The stake represents the company’s most valuable overseas asset since it paid $2.7bn for 20 per cent of the ExxonMobil-operated Sakhalin-1 project in Russia’s western Siberia region in 1998.
Speaking to the Financial Times, a senior ONGC official described the acquisition as “a highly prospective field”.
ONGC’s acquisition of the stake in the project means it will gain as partners Petrobras, the Brazilian state-owned company, and Royal Dutch Shell, the Anglo-Dutch energy group, both of which hold 35 per cent stakes in the field.
Final agreement is subject to pre-emption rights that must be exercised in the next month. Last night ONGC officials were confidently expecting a rapid conclusion to the transaction.
ONGC’s success came as Subir Raha, chairman, held a first round of talks with Murli Deora, India’s new petroleum minister.
Mr Deora has pledged to continue the Indian government’s widely applauded efforts to strengthen the country’s energy security through a strategy of aggressive “energy diplomacy” and alliances.
ONGC’s role in Campos Basin will align it with Petrobras, whose upstream exploration expertise is valued in New Delhi. Brazil’s president has spoken of India as a future energy partner for Latin America’s largest economy.
“This is not only a first move in a promising region; it also puts ONGC in a partnership with companies that has potential to grow elsewhere,” said Madhu Nainan, of Petrowatch, an energy industry publication in Mumbai.
ONGC’s earlier effort to achieve a presence in the region failed when it was outbid by Chinese rivals for assets in Ecuador. The Indian group has interests in Sudan, Libya, Myanmar, Iran, Iraq and Syria.

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