Petrobras to exit KG block

Bidding adieu

New Delhi, Jan. 3 (PTI): Brazil’s Petrobras has decided to quit Oil and Natural Gas Corporation’s (ONGC) prolific gas discovery block in the Krishna-Godavari basin, a vacancy that Royal Dutch/Shell and BP Plc are keen to fill.

Petroleo Brasileiro SA, or Petrobras, Brazil’s state-controlled oil firm, wants to offload its 15 per cent stake in KG-DWN-98/2 to ONGC as it wants to concentrate on developing its massive oil and gas finds back home, a top official said.

The vacancy may not last long as Shell and BP Plc have expressed interest in taking the stake in the block that sits next to Reliance Industries’ giant KG-DWN-98/3 or KG-D6 block off the east coast.

Shell has offered technology to convert natural gas into liquid (liquefied natural gas) at a floating offshore facility at the deep sea 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 undersea pipelines.

“For us, Shell technology makes more sense,” he said, adding 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, including the ultra deep-sea UD-1 find in the block. The discoveries are estimated to hold 5-15 trillion cubic feet of in-place reserves.

Petrobras told ONGC that it was putting all its resources on developing finds off the Atlantic coast, including the 8 billion barrels Tupi oil find.