India Gives Thumbs Up for $2B Carabobo Oil Investment

NEW DELHI (Dow Jones), Mar. 19, 2010

The Indian government Friday approved an investment of $2.18 billion during 2010-2015 by three state-run oil companies in Venezuela's Carabobo 1 oil block.

On Feb. 11, Oil & Natural Gas unit ONGC Videsh Ltd., Indian Oil Corp. and Oil India, in consortium with Spain's Repsol YPF SA and Malaysia's Petroliam Nasional Bhd., were awarded development rights for the Carabobo 1 block.

The three Indian companies hold an 18% stake in the project, with OVL holding 11% while IOC and Oil India holding 3.5% each. Spain's Repsol and Malaysia's Petronas hold an 11% stake each in the project. Venezuela's state-run oil firm Petroleos de Venezuela SA, or PDVSA, holds the remaining stake.

The consortium will enter into an arrangement with PDVSA on April 22. The consortium has paid a $1.05 billion signing bonus and will pay another $1.05 billion to PDVSA for financing.

While OVL is likely to invest $1.33 billion, IOC and Oil India are expected to invest $425 million each. The cabinet panel also approved their borrowing plan but without government guarantees, Chidambaram said.

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