State-run Oil and Natural Gas Corp Videsh Ltd (OLV) acquired 25 percent of the Satpayev oil block in Kazakhstan on Saturday, in a deal aimed at boosting India's energy security and helping fuel fast economic growth.
India, which strongly depends on oil imports, has been less successful than its energy-hungry economic and political rival China in tapping the huge energy riches of former Soviet Central Asia. A quarter of Kazakhstan's oil production is Chinese-owned.
Under the deal signed with Kazakh state oil firm KazMunaiGas (KMG), OVL secured a quarter of the Satpayev offshore block in the Caspian Sea. OVL will pay KMG an $80 million signing bonus.
"We've calculated our capital expenditure needed to extract the field's forecast reserves of around 250 million tonnes, taking into account the drilling of wells and construction of infrastructure, and it will be in the neighbourhood of $9 billion," KazMunaiGas head Kairgeldy Kabyldin told reporters.
He gave no timeframe for the investment.
KMG owns 75 percent of Satpayev, and Kabyldin said the development of the field would be financed proportionately to the each share of the project.
Kazakh Oil and Gas Minister Sauat Mynbayev told reporters earlier on Saturday that the exploration programme would be financed entirely by India.
"Next year we will start drilling the first oil exploration well," Kabyldin said.
Kazakhstan, Central Asia's largest and most successful economy, has to date attracted more than $120 billion in foreign investment, mainly to its key oil and gas, and metals.
The mainly Muslim nation of 16.4 million, which covers an area five times the size of France, holds about 3 percent of the world's recoverable oil reserves and has doubled its crude output to about 80 million tonnes over the past decade.
The Hindustan Times reported this week that a peak output of 287,000 barrels per day (14.3 million) is envisaged from the Satpayev field. It gave no timeframe.
Kazakh President Nursultan Nazarbayev and Indian Prime Minister Manmohan Singh, who oversaw the signing of the deal, had "agreed to cooperate further in oil exploration, development and processing", Nazarbayev's office said, giving no detail.
(Writing by Dmitry Solovyov; Editing by Alison Birrane)