OVL gets green signal to invest in Brazil, Trinidad and TobagoJune 26th, 2008 - 7:55 pm ICT by IANS
New Delhi, June 26 (IANS) The Cabinet Committee on Economic Affairs (CCEA) Thursday approved a $437 million investment by the state-run overseas exploration body ONGC Videsh Limited in offshore oil blocks in Trinidad and Tobago and Brazil. CCEA authorised OVL, the overseas investment arm of energy major ONGC, to invest about $282 million in two Brazilian offshore blocks SM 1413 and ES 470 for the first exploration phase, with an internal rate of return of 16 percent.
Besides, the Empowered Committee of Secretaries (ECS) has been authorised to approve an increase in investment up to 30 percent on escalation of costs in the future.
The petroleum and natural gas ministry was also allowed to give permission to ONGC to give funding and guarantee support, if required, in excess of 30 percent of ONGC’s net worth, without seeking budgetary support from the government.
OVL has also been given permission to look for an “experienced regional player” to give a suitable share of the blocks for “sharing risk and leveraging experience”.
CCEA also approved similar investment rules for the North Coast Marine Area 2 block in Trinidad and Tobago, where OVL will invest $155 million in the first exploration phase with an internal rate of return of 14 percent.
However, this decision is on condition of a successful negotiation of the production sharing contract with the Trinidadian government.
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Tags: budgetary support, cabinet committee, economic affairs, escalation, exploration phase, guarantee support, internal rate of return, investment arm, investment rules, net worth, north coast, offshore blocks, offshore oil, oil blocks, overseas exploration, overseas investment, rate of return, regional player, secretaries, trinidad and tobago