New Delhi, Dec. 16: The government has approved a plan by Oil India and Indian Oil Corporation to set up a special purpose vehicle that will pick up overseas projects, including exploration ventures.

The cabinet committee on economic affairs (CCEA), however, has shot down Oil and Natural Gas Corporation?s bid to pick up a stake in a Nigerian offshore oilfield, as it feels the venture could turn out to be risky.

In a separate decision, however, the panel has approved ONGC?s proposal to invest $820 million in Operation Sugarloaf in Brazil, if it wins the bid. ONGC had won an auction for South Atlantic Petroleum?s 45 per cent stake in Nigeria?s yet-to-be-developed Akpo oil and gas fields. But the CCEA did not approve the $2-billion investment.

South Atlantic petroleum is owned by former Nigerian defence minister Theophilus Danjuma. The committee felt dealing with him was ?too risky?.

The approval for Oil India and Indian Oil?s joint SPV came with riders. If Indian Oil is not interested in forming the SPV, Oil India could do so with other navratna downstream public sector oil firms, said Union finance minister P. Chidambaram.

He was briefing reporters after the CCEA meeting, chaired by Prime Minister Manmohan Singh.

The panel has said proposals for exploration and production projects would be jointly undertaken by OIL and downstream oil PSUs. These will have to be placed before an empowered committee of secretaries (ECS). ONGC Videsh follows the same pattern.

The ECS has been authorised to consider the SPV?s proposals to acquire overseas exploration and production assets and give its recommendations to the CCEA, he said.

The CCEA has cleared another proposal, which said any SPV floated by PSUs with OIL would be purely need-based. The committee of secretaries will ensure that there is no proliferation of such SPVs, Chidambaram said.

He said it would be ensured that risks associated with overseas projects are restricted to the extent of the PSUs? participation in the SPV.

The finance minister said in order to avoid needless competition between PSUs and ensure that these investments fit within the framework of the overall energy security, the secretaries will chalk out the strategy to be adopted and co-ordinate efforts of PSUs. This would be done in consultation with the ministry of petroleum and natural gas. This will help OIL and navratna downstream PSUs acquire oil and gas abroad and enhance energy security.

In another decision, the CCEA has approved investments to the tune of Rs 687 crore by Newsbridge India Investments, Mauritius, into Shriram Holdings.