NEW DELHI (Dow Jones)--The Indian government Thursday approved a proposal from state-owned Oil & Natural Gas Corp.'s (500312.BY) unit to invest an additional $70 million in an oil project in Brazil.
With this, ONGC Videsh Ltd.'s total investment in the BC-10 offshore block in Brazil will...continue here
go up to $383 million, Union Home Minister P. Chidambaram told reporters, explaining the Cabinet's decision.
ONGC Videsh, which invests in assets overseas, had acquired a 15% participatory interest in the block in 2006. The block is operated by Royal Dutch Shell PLC.
The Cabinet has also set up a committee to look into a proposal to invest another $17.5 million in the project if its capital-expenditure target is raised or in case of a cash shortfall, he added.
India, which imports three-quarters of its crude oil requirement, is facing falling output at its fields. It is seeking to cover the shortfall in domestic production by acquiring stakes in oil and gas blocks overseas.
ONGC Videsh aims to acquire assets to produce 20 million tons a year of oil or oil equivalents by 2020. It currently produces 170,000 barrels a day, or 8.75 million tons a year, at its fields in Sudan, Vietnam, Venezuela, Russia and Syria.
"The additional investment is expected to provide higher reserve accretion of hydrocarbon and more production from the project" to ONGC Videsh, Chidambaram said.
ONGC Videsh Managing Director R.S. Butola had said in September production had started at the BC-10 block in July and that the company expected the total output to be ramped up to 40,000 barrels a day by December.
The peak output at BC-10 is expected to be 100,000 barrels of oil equivalent a day, according to Shell's Web site.
-By Rajesh Roy and Sunil Raghu; Dow Jones
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