OVL to buy stake in ExxonMobil's oil field

The Cabinet Committee on Economic Affairs has approved ONGC Videsh Ltd's proposal to invest $820 million for acquiring US energy giant ExxonMobil's interests in an oil field located off the Brazilian coast.

Finance Minister P Chidambaram said the CCEA last evening authorised "OVL to invest, in the event of its being the successful bidder, up to $820 million in the Project Sugarloaf."

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OVL, the overseas arm of state-owned Oil and Natural Gas Corporation, would pay $330 million for acquiring the full equity of Exxon's Brazilian subsidiary and the remaining $490 million would be towards OVL's share of development cost.

ExxonMobil holds stake in two offshore blocks in the Campos Basin off the Brazilian coast.  It has a 30 per cent stake in Block BC-10, where an oil discovery with potential reserves of 400 million barrels had been made.

The government aims to ensure the company would get an average internal rate of return of at least 10 per cent on the investment, an official statement released said.