New Delhi: Brazil’s Petroleo Brasileiro SA (Petrobras) had decided to quit Oil and Natural Gas Corp.’s (ONGC) prolific gas discovery block in the Krishna-Godavari basin, a vacancy that Royal Dutch Shell Plc and BP Plc are keen to fill in.
Petrobras, Brazil’s state- controlled oil firm, wants to offload its 15% stake in KG-DWN-98/2 to ONGC as it wants to concentrate on developing massive oil and gas finds back home, a top official said on condition of anonymity.
The vacancy may not last long as Shell and BP have expressed interest in taking the stake in the block that sits next to Reliance Industries Ltd’s giant KG-D6 block off the east coast.
Home-bound: A Petrobras oil platform in Brazil’s Campos basin. The Brazilian oil exploration company wants to use all of its resources for developing its oil and gas discoveries back home. Petrobras / Bloomberg
Shell has offered technology to convert natural gas into liquid (liquefied natural gas) at a floating offshore facility and then transporting the fuel in ships to the shore.
BP, on the other hand, has offered the conventional technology of producing gas at an offshore platform and then transporting it to land through under-sea pipelines.
“For us, Shell technology makes more sense,” the official said, adding that a decision to induct Shell or BP can only be taken after ONGC acquires Petrobras’ shareholding in the block.
ONGC has made 10 gas discoveries in the block, including a ultra deep-sea discovery. The discoveries are estimated to hold anywhere between 5 trillion cu. ft and 15 trillion cu. ft of reserves.
Petrobras had an option to raise its stake to 30% in the oil block.
Petrobras told ONGC that it is putting all its resources on developing finds off the Atlantic coast, including the 8 billion barrels oil reserves discovered in the Tupi oilfield off the Brazilian coast. The investment, in excess of $100 billion, planned by the firm may allow Brazil to overtake the output of all members of the Organization of the Petroleum Exporting Countries except Saudi Arabia.
ONGC lacks the technology to produce gas from its deep-sea discoveries. It had given stakes to Petrobras and Statoil ASA to get their expertise in deep-sea exploration.