BPCL pays for defaulting Videocon in Brazil oil block
28th Sep 2020

Bharat Petroleum Corporation (BPCL) has paid for its defaulting partner Videocon Industries after it had relied on a rarely used model to acquire stake in five oil blocks in Brazil. In September 2008, BPCL and Videocon Industries had formed a 50:50 joint venture to acquire a Brazilian oil exploration firm for $283 million.

The two firms formed an incorporated joint venture IBV Brasil Petroleo Limitada to acquire Encana Brasil Petroleo Limitada from Canadian gas producers EnCana. Usually such acquisitions are done through unincorporated joint ventures but BPCL chose to form an incorporated joint venture. Incorporated joint venture is organised as separate and distinct legal entity. The entire entity is held in default if any one of the partners doesn't pay for its share of cost. With bankrupt Videocon unable to pay its cash calls for exploration and development of the oilfields, IBV faced likelihood of a default and the risk of being booted out.

BPCL is into exploration, production and retailing of petroleum and petrol related products. The retail business unit of BPCL is into marketing of petrol, diesel and kerosene.