MOL will take stake in block HF-ONN-2001/1, an ONGC press release said in New Delhi.
Block HF-ONN-2001/1 that ONGC had won in the third round of bidding under New Exploration Licensing Policy (NELP), has an aerial extent of 1,513 square kilometres.
"Himalayan foothills comprise a frontier exploration area, which has been eluding commercial breakthroughs notwithstanding known evidences of hydrocarbon generation. MOL has experience of working geologically complex fold belt areas in similar geological setting in Pakistan and has made discoveries," the release said.
After the farm-out, one exploration well is planned to be drilled in block HF-ONN-2001/1 by end of 2008 and another later.
The proposed assignment of Participating Interest (PI) by ONGC to MOL is a part of strategic alliances ONGC wants to have with internationally renowned and experienced companies for exploration.
Under this strategic initiative, ONGC has already approached the government for assignment of PIs in exploration blocks under NELP to affiliates of ENI of Italy, Petrobras of Brazil, StatHydro of Norway and UK's British Gas.
MOL is a fully-integrated petroleum company with operations covering exploration and production and downstream.
MOL is a leading oil industry player in Hungary and Slovakia and has growing business ties with Western Europe, Russia and the Middle East.
Zoltan Aldott, Executive Vice President of MOL, said that the farm-out agreement with ONGC is a part of MOL's strategy to build a well-balanced portfolio.
After signing the farm-out agreement, ONGC Director (Exploration) D K Pande said ONGC is optimistic about this association with MOL in the folded belt area.