Shirish Nadkarni
OGJ Correspondent
MUMBAI, Sept. 18 -- Videocon Industries and Bharat Petro Resources Ltd.—a subsidiary of India's Bharat Petroleum Corp. Ltd. (BPCL)—have entered into an agreement to purchase shares of Brazilian exploration EnCana Brasil Petroleo Ltda. (EBPL) from Canada's EnCana Corp. and 749793 Alberta Ltd.
The deal's value is estimated at $425 million, of which $165 million would be paid immediately and the balance invested in exploration.
The sale is expected to be completed in first quarter 2008, with the effective date of the transaction Jan. 1.
EBPL holds varying interests in 10 ultradeepwater exploration blocks in four concessions off Brazil, seven of which are operated by partner Petroleo Brasileiro SA (Petrobras). Anadarko Petroleum Corp. is the fourth partner in EBPL.
An EnCana spokesman said the company was exiting Brazil to concentrate on North American unconventional gas and integrated oil sands resources.
Indian companies have stepped up their pace of foreign acquisitions, striking deals valued at more than $16 billion through August of this year, up from $6.2 billion during the same period a year earlier, according to Dealogic.
Both Videocon and BPCL have been eyeing global oil equity. Although consumer business accounts for 90% of Videocon's $3.68 billion, the oil business brings in more than half its profits, so the company is seeking to increase its interests in the oil business.
BPCL, focused on refining and marketing petroleum products, embarked on the acquisition of oil exploration assets to offset losses from selling petroleum products below cost. It will spend as much as $370 million on exploration over the next 3 years, targeting small development stakes and producing fields.
The refiner recently bought equity in three blocks in the North Sea in collaboration with Tata Petrodyne and has gathered stakes in 14 oil and gas blocks in India, West Africa, South America, and Australia since it began its oil equity drive.