Sinochem blocked from Brazil oilfield purchase

Oil & Natural Gas Corp (ONGC) of India and Royal Dutch Shell will increase their ownership of a Brazilian oilfield, blocking a bid by China's Sinochem, said three people with knowledge of the matter.

ONGC, which owns 15 per cent of the Parque das Conchas field, will acquire a further 12 per cent from Petroleo Brasileiro, two of the people said, asking not to be identified before an announcement is made. Shell, which operates and owns 50 per cent of the offshore block, exercised its right to buy a further 23 per cent, one person said.

The Anglo-Dutch oil company, which missed profit estimates last quarter by the most since 2008, has been expanding the Brazil project in part to counter production losses in Nigeria and asset write-downs in North America.

State-run ONGC, which has for years lost out to Chinese competitors, announced a record number of acquisitions this year and plans to spend US$174 billion by 2030 to increase output.

"There's no option for ONGC now but to be aggressive," said Kamlesh Kotak, head of research at Asian Markets Securities in Mumbai. "It has to think long term, it has to think overseas, because its operations in India are flattening out. It won't be an easy task."

ONGC will fund the purchase of the stake at the field, also known as BC-10, with its own cash, the people said.

Sudhir Vasudeva, chairman of ONGC, did not answer two calls seeking comment. A spokeswoman for Shell declined to comment.

Petrobras said last month it would sell its 35 per cent stake in the offshore project to Sinochem for US$1.54 billion. The existing partners in the field had the right of first refusal and could block the Sinochem offer, Petrobras said at the time.

Spokesmen for Petrobras and Sinochem could not be reached for comment.