Shell, Petrobras and ONGC announce changes in BC-10 holdings and the entry of ONGC Videsh Ltd (OVL)

26 Apr 2006, Shell Brasil Exploration & Production (Shell) and Petrobras confirm that Shell has exercised its pre-emption option for an additional 30% participating interest in the Shell operated BC-10 block located offshore Brazil. Further, Shell and Petrobras have agreed, through Petrobras waiving its pre-emption rights, to the on-sale of 15%, half of Shell’s additional stake acquired through this pre-emption, to the Indian National Oil Company, ONGC Videsh Ltd (OVL). The transaction increases Shell’s equity interest while bringing ONGC into the joint venture partnership. Shell will remain operator.

A ceremony is scheduled for Thursday, April 27th, in New Delhi, when the companies will sign and exchange documents related to the changes in BC-10 shareholdings, which will stand at Shell 50%, Petrobras 35% and OVL 15% once the transaction has been completed and approved by Brazil’s National Petroleum Agency.

Shell is a leading international player in offshore Brazil, with production from the Shell-operated Bijipurá and Salema fields and interests in 14 exploration blocks. Technical and commercial studies are underway for the development of resources in BC-10, which would be Shell’s second operated development in Brazil, with the potential for production of around 100,000 barrels of oil per day.

During the coming months, Shell, Petrobras and ONGC will continue to analyse options for the development of BC-10. The project has entered the front-end engineering design phase and a high-level development concept has been selected, which includes an FPSO and sub-sea systems to produce the discoveries in the block.

According to John Haney, Shell Brasil EP Vice President, “Deepwater offshore Brazil is an important element of our global growth strategy. We believe that an increased interest in BC -10 is an attractive opportunity and re-confirms our commitment to growth in Brazil. The nature of this deal emphasises the strength of our relationship with Petrobras and our growing relationship with ONGC.”

OVL Chairman, Mr. Subir Raha said:

"We are extremely pleased to be joining the BC-10 joint venture. It broadens our portfolio through entry into a very valuable prospect and marks our presence in Latin America. We look forward to partnering with Petrobras and Shell, two of the most renowned companies in the area of deepwater operations.”

BC-10 was declared commercial in December 2005. The Declaration of Commerciality occurred after a substantial exploration and appraisal program involving 13 wells and significant engineering and technological studies. In total, six discoveries were made in the block, which resulted in four development areas: Ostra, Argonauta, Abalone and Nautilus. The block is located approximately 120 km Southeast of the city of Vitória, Espírito Santo State, in water depths ranging from 1500 to 2000 meters.

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Andy Corrigan

Exploration and Production and Gas and Power

Royal Dutch Shell plc

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