Petrobras, ONGC May Swap Exploration Blocks

RIO DE JANEIRO Jan 30, 2007 (Dow Jones Newswires)

Brazil's state-run oil firm Petroleo Brasileiro SA (PBR) and India's Oil & Natural Gas Corp. (500312.BY) in mid-January began talks on a possible swap of oil and gas exploration areas, Petrobras said.

Petrobras is analyzing blocks in the Krishna-Godavari, or KG, Basin that have a large natural gas potential, a Petrobras press official told Dow Jones Newswires by email late Monday.

In return, ONGC would get blocks in Brazil's Campos Basin off the coast of Rio de Janeiro state from Petrobras that have an equivalent value in the sale price of the oil or gas to be sold from the blocks.

The two companies haven't set a date yet to close a deal on a swap, the Petrobras official said.

ONGC, India's largest oil and gas producer by volume, in mid-January said it has made new gas finds in the KG and the Mahanadi basins off the eastern coast of India.

ONGC Chairman R.S. Sharma at the time said his company is willing to offer a stake to a strategic partner such as Petrobras, Italy's ENI SpA (E) or Norway's Norsk Hydro ASA (NHY) to help ONGC with ultra deep water drilling techniques.

Possible gas production by Petrobras from the KG Basin would be used to supply domestic consumption in India, Petrobras said.

Petrobras and ONGC plan to perform more technical evaluations of the blocks in question before closing a deal.

In April 2006, ONGC's overseas exploration unit ONGC Videsh Ltd. bought a 15% stake in the BC-10 block in Brazil's Campos basin from Royal Dutch Shell PLC (RDSB.LN) for $170 million.

Copyright (c) 2007 Dow Jones & Company, Inc.

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