ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp
, pulled out of an auction of $184 billion oilfield in Brazil after it could not stitch an alliance to bid
for the giant project.
OVL was among the 11 companies shortlisted to bid for Brazil's Libra pre-salt block, one of the world's largest offshore oil discoveries.
It however did not make a bid at the auction on Monday as it could not form a consortium with any of the other shortlisted companies, sources privy to the development said.
The auction attracted just one bid from a consortium led by Anglo-Dutch oil major Shell, France's Total and China PetroChina and its sister company Cnooc. Brazilian state-run energy company Petrobras is also part of the consortia which got the giant field at auction start price or the minimum price.
The offshore area holds between 8 billion and 12 billion barrels of recoverable oil, according to Brazil's oil regulator and Dallas-based oil certification company Degolyer & MacNaughton (D&G).
If the estimates hold up Libra, which requires an estimated $184 billion investment, has enough oil to meet China's entire oil consumption need for three years.
Production is forecast to exceed 1 million barrels a day when fully ramped up.
Sources said OVL could not have gone alone due to the huge investment required to develop the field.
Unable to find suitable consortium partners, it decided not to bid, they said.
Shell, based in The Hague, and France's Total each have 20 per cent stakes in the winning consortium, while Cnooc and CNPC have 10 per cent apiece. The remaining 60 per cent will be with Petrobras. The consortia won the 35-year concession for the Libra prospect by promising the government a minimum 41.65 per cent of profit oil, or the barrels remaining after costs.
The winning consortium will also have to pay a signing fee of 15 billion reais (USD 6.9 billion).
Located more than 50 kilometers from Brazil's southeastern coast and discovered in 2007, the pre-salt gets its name from the layer of Cretaceous-era salt formed at a time when dinosaurs still lived and which traps the crude under the Atlantic seabed.
Other firms who were shortlisted but did not bid in the auction included Repsol-Sinopec, the joint venture between the Spanish and Chinese players, Ecopetrol of Colombia, Mitsui of Japan, Galp of Portugal and Malaysia's Petronas.