Shirish Nadkarni
OGJ Correspondent

MUMBAI, Mar. 22 -- India's state-owned Oil & Natural Gas Corp. (ONGC) and Brazil's Petroleo Brasileiro SA (Petrobras) are nearing an equity partnership for deepwater oil and gas blocks in India and Brazil.

During a joint working group meeting earlier this month, ONGC agreed to allow Petrobras to view data on nine offshore blocks for the possible purchase of a stake in them.

"The blocks are spread across the country, but are primarily concentrated in the Krishna-Godavari, and Mahanadi basins. Petrobras is keen on the Krishna-Godavari basin," said ONGC director of exploration D.K. Pande.

The Brazilian company has shown interest in 27 ONGC-operated deepwater blocks. These include those won by ONGC in the sixth round of bidding under the New Exploration Licensing Policy (NELP-VI).

Pande said ONGC was keen to access Petrobras technology. "Evacuation of oil and gas from deepwater blocks demands high technical knowledge, and Petrobras specializes in deepwater exploration and production," he said.

Farm-ins would give ONGC an opportunity to improve its average recovery rate, which is 28%, compared with the world average of about 45%.

ONGC recently discovered large gas reserves on the UD-1 block in the ultradeepwater Krishna-Godavari basin, 55 km off Andhra Pradesh.

However, the company has sparred with the directorate general of hydrocarbons, the upstream regulator, over gas assessment and testing. "Petrobras will give us expertise which would help us avoid similar run-ins," Pande said.

ONGC and Petrobras likely will enter into a swap deal where Petrobras will be offered stakes in oil blocks in India and in return will offer ONGC stakes in oil blocks in Brazil. ONGC, thorough its overseas investment arm ONGC Videsh, already owns a 15% stake in Block BC-10 in Brazil.