ONGC Videsh and Petrobras Ink Deal for Brazilian Exploration

Brazil - BC 10
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Continuing the inter-company co-operation which lead to OVL's maiden South American investment earlier this year, a historic MOU was signed by Mr. R.S.Sharma, Chairman OVL and ONGC Group of Companies, and Mr. Jose S. Gabrielli De Azevedo, President & CEO Petrobras on September 12th in the presence of the Prime Minister of India, Dr. Manmohan Singh, and the President of Brazil, Mr. Luiz Incacio Lula da Silva, at the Presidential palace in Brasilia, Brazil before distinguished dignitaries, heads of State and media.

The MOU encompasses strategic cooperation and participation in the exploration and production of hydrocarbon resources onshore, as well as in shallow and deepwater, areas. The MOU will facilitate opportunities for joint collaboration by these two companies in India, Brazil and third countries.

Announcing the MOU in Brasilia, Mr. R.S.Sharma said "This MOU continues the new era of joint collaboration and mutual respect between two E&P giants, ONGC, the NOC of India and Petrobras , the NOC of Brazil. We intend to use this opportunity to match strength with strength in our future endeavors."

Earlier Mr. R.S.Butola, MD, OVL said "This MOU is the first step in a strategic collaboration that will play an important role in other South American, Indian and third country opportunities, providing a technology transfer and knowledge alliance between our countries' strongest oil companies."

In April 2006, Petrobras accommodated OVL's acquisition of 15% of the equity in Block BC-10, located on the prolific Campos basin in Brazil's deepwaters. Shell is the Block operator, holding a 50% participating interest, with Petrobras holding the remaining 35% interest. BC-10 Block is located in approximately in 1800 m water depth, 120 km off the Brazilian coast, and hosts eight exploration and five appraisal wells drilled to date. Initial studies suggest a substantial estimated recoverable reserve of Oil and Gas over the producing life of the field. The Block is currently under development and the production is scheduled to commence in the last quarter of 2009, with OVL's equity share at peak production expected to reach approximately 1 MMPTA.

BC10, OVL's first venture in South America, calls for an upfront investment of about US $410 million, including the acquisition consideration, plus an upside capex.


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