ESSAR Energy yesterday said it agreed to sell a 50 per cent stake in an offshore gas exploration block in Vietnam to Italian oil major Eni.
Under the deal Eni will assume operator status for the block.
Further investment is required to establish gas reserves in the block and no gas is being produced at present, Essar Energy said.
Block 114 is located in shallow waters off the coast of Vietnam and holds an estimated one trillion cubic feet of gas.
The deal is yet to be agreed by the Vietnamese government, the company said in its announcement.
It added: “The reduction in Essar Energy’s stake in block 114, which was previously 100 per cent, is in line with the strategy for its exploration and production business of introducing strategic partners to help manage risk and of focusing on the development of its core assets.”
The firms plan to drill two exploration wells and conduct seismic tests before decided the next steps for the block, Eni said yesterday.
Last week Essar Energy, which recently fell out of the FTSE 100, reported that its figures had been dented by a tax case with Indian authorities.
The company said January’s ruling against tax breaks had pushed it to a pre-tax loss of $1.1bn (£707m) for the 15 months to 31 March.
The company is pinning its hopes on the Vadinar refinery – India’s second largest private sector oil refinery with capacity of 20m metric tonnes per annum, or 405,000 barrels per day.
City A.M. Reporter