ONGC is interested in buying BP?s stake in the Vietnam project. Its overseas arm, ONGC Videsh Ltd (OVL), is a partner in the block.
BP has 35% participating interest in the block, with PetroVietnam, a Vietnamese government-owned company, holding 20%.
The offshore block 06.1, located 370 km south-east of Vung Tau on the southern Vietnamese coast, started production in 2003.
On Tuesday, BP?s board decided to sell its stake in the Vietnam project as part of its plan to raise at least $10 billion to cover initial cost of the Gulf of Mexico oil spill clean-up.
Sources have confirmed that such a move is on. ONGC chief RS Sharma is in Vietnam as part of a high-level delegation led by petroleum minister Murli Deora to participate in the East Asia Energy Ministers? meeting.
National oil companies usually hold the right of first refusal in case an overseas partner decides to exit a block in their country. However, it is not clear whether such provisions are enshrined in the production sharing contract (PSC) for the block, which was signed in 1998 when resource nationalism in oil and gas-rich countries was still not so strong.
The exploration licence for the block was acquired by OVL in 1988. Later, the company roped in BP and PetroVietnam, a Vietnamese government-owned entity, as partners, with 35% and 20% participating interest, respectively.
The consortium has developed the Lan Tay field in the block. During 2008-09, OVL?s share of production from the project was about 1.848 billion cubic meter (bcm) of gas and 0.046 million metric tonne (mmt) of condensate.
BP has decided to sell some of its assets to bolster its cash reserves to pay for the oil spill in Gulf of Mexico, the cost of which could rise to $100 billion. It has already reduced capital spending by about $2 billion and suspended dividend payments of about $10.6 billion for this year.