Monday, September 11 2006 18:22 Hrs (IST) - World Time -

New Delhi: State-run ONGC Videsh, the overseas investment arm of Oil and Natural Gas Corporation (ONGC) has signed production sharing contracts for two offshore oil exploration blocks in the northwest coast of Cuba, where it already holds stakes in six exploration blocks.

The production-sharing contract for the two blocks was signed Sep 9 in Havana by ONGC Videsh Managing Director R.S. Butola with the national oil company Cuba Petroleum.

Unlike in the case of the six exploration blocks 25, 26, 27, 28, 29, 36 and part of Block 35 in which ONGC Videsh farmed in with Spain's Repsol-YPF last year to take 30 percent stake, in the two new blocks 34 and 35 covering 4,300 sq km the Indian company will be holding 100 percent stake and would handle the operations alone, a senior company official told IANS.

"We bid for the two block through the open acreage system after evaluating the data bought two years back. We had focused on two-three blocks and after negotiating the production sharing agreement which took some time, finally signed the contract with the Cuban national oil company," the official said.

Under the production-sharing contract, ONGC Videsh has committed to three-stage investment that is expected to see initial investment of around $50 million in seismic data gathering and drilling for exploration, an official said.

Ahead of commencing work, ONGC Videsh would soon be setting up a branch office in Havana.

The two blocks awarded to ONGC Videsh are among 16 blocks awarded by Cuba Saturday for exploration to 16 companies at a time when the US has been voicing concerns about the environment impact of exploration activities in Cuba's Gulf waters.

Meanwhile, official sources said ONGC Videsh and its partners Repsol-YPF and Norway's Norsk Hydro in the six exploration blocks would be drilling an exploratory well before yearend.

While Repsol-YPF holds 40 percent stake in the six blocks and is the operator, Norsk Hydro of Norway holds 30 percent stake and ONGC Videsh the remaining 30 percent. Three years ago Repsol found indications of good quality oil in one of the exploratory well drilled.

The two new blocks are just below the other blocks and closest to the northwest coast where heavy crude is pumped from onshore.