The government has cleared ONGC Videsh Ltd's non-binding bid for Project Diamond in Ecuador, which would give it access to 1 million barrels of crude petroleum annually.
The Oil & Natural Gas Corporation subsidiary is pitted against a consortium comprising China Petroleum & Chemical Corporation and China National Petroleum Corporation, which had made a $1.2 billion bid in the first round against the Indian company's $1.08 billion.
The assets include Canadian company EnCana's stake in Amazon blocks and Tarapoa in addition to 36 per cent stake in a new pipeline from the blocks to the Pacific coast.
The second round of bidding was cleared by an empowered committee, which had Petroleum Secretary SC Tripathi and Economic Affairs Secretary Rakesh Mohan as members.
The decision was based on the risk analysis for the assets. It also set a bid band: OVL can bid up to $ 300 million. OVL executives did not comment on the practicality of this restriction.
Project Diamond comprises five discovered fields and two fields under exploration. OVL proposes to use the sour heavy crude for entering swap deals as it will be difficult to transport the crude to India.
Besides, only a few refineries can process the crude -- Reliance Industries' Jamnagar refinery being one of them. The swap deals usually work at a discount of 30 per cent on the prevailing international prices.
The Ecuador government is also pitching for Indian participation in its refineries.