On Saturday, state-owned Bharat Petroleum Corporation Ltd (BPCL) reported that it had signed a pact with Brazil’s national oil company Petrobras for sourcing crude oil from the country as part of its plans to diversify its sourcing needs.

Notably, BPCL imports a huge volume of crude oil (turned into petrol and diesel) at its three oil refineries at Mumbai, Bina (Madhya Pradesh) and Kochi (Kerala). The company, which gets most of its supplies from west Asian countries such as Iraq and Saudi Arabia, is exploring diversification of its sources of supply in an attempt to reduce reliance on any particular region.

The company’s chairman, managing director Arun Kumar Singh, and Petrobras CEO Caio Paes de Andrade signed a memorandum of understanding (MoU) in Brazil.

As part of this, Bharat PetroResources Limited (BPRL), BPCL’s upstream oil and gas exploration and production subsidiary, would invest USD 1.6 billion to develop an oil block in Brazil. BPRL holds a 40 per cent stake in an ultra-deep water hydrocarbon block of Petrobras. Brazil’s Petrobras is the operator with 60 per cent interest. It is noteworthy that multiple oil discoveries have been made in the block, which is being developed now.

Originally in 2008, BPCL had collaborated with Videocon to take the stake in the block. IBV Brasil SA, a 50-50 joint venture (JV) between Videocon and BPRL Ventures NV, a unit of BPRL, held 40 per cent. However, after the bankruptcy of Videocon, BPRL now owns the 40 per cent stake.