Cabinet authorizes BPCL unit's $1.6 billion investment plan in Brazil

28 Jul 2022 , 08:08 AM

The state-owned Bharat Petroleum Corporation Ltd. (BPCL) was given permission by the Union Cabinet on Wednesday to spend an extra USD 1.6 billion on a Brazilian oil block.

Additional investment by Bharat PetroResources Ltd (BPRL), a fully owned subsidiary of BPCL, for the construction of the BM-SEAL-11 Concession Project in Brazil, has been authorized by the Cabinet Committee on Economic Affairs, which is presided over by Prime Minister Narendra Modi.

The block will go into production between 2026 and 2027. A 40% ownership share in the block belongs to BPRL. Petrobras, Brazil’s state-owned oil firm, owns 60% of the operating business.

In the block, which is now being exploited, many oil finds have been found. Initially, BPCL and Videocon worked together to acquire the interest in the block in 2008. A joint venture between Videocon and BPRL Ventures NV, a division of BPRL (the upstream branch of BPCL), owned a 50/50 interest in IBV Brasil SA, which controlled 40%. But as a result of Videocon’s bankruptcy, BPRL now fully controls the 40% interest.

The approval from the CCEA will make equity oil more accessible, enhancing India’s energy security and diversifying the nation’s crude oil supplies. The statement added it also increases India’s footing in Brazil, which would further expand economic opportunities in neighboring Latin American nations, and that Indian oil corporations have indicated an interest in sourcing additional crude oil from that nation.

The CCEA also authorized an increase in the company’s authorized share capital from Rs15,000 billion to Rs20,000 billion as well as an increase in the limit of equity investments by BPCL in BPRL.