Reliance Industries [Get Quote] has signed an agreement to take a 90 per cent stake in an oil block in Peru.

Reliance bought the stake in Block 141 in the high plateau of Peru from Pan Andean Resources Plc, company CEO and president (oil & gas) P M S Prasad said on Wednesday.

Pan Andean will hold the remaining 10 per cent stake. As part of the deal, Reliance will incur all exploration costs through commercial discovery.

Following a commercial discovery of an agreed size, Pan Andean will reimburse Reliance for its share of the exploration costs.

Under the terms of the agreement, Pan Andean also has the right to increase its stake to a maximum of 30 per cent, and the company will reimburse Reliance for that proportion of its exploration expense on the block which Pan Andean will then own.

The company believes that the block contains highly prospective and potentially valuable structures.

Prasad said Reliance was looking at oil blocks in Latin America particularly in the heavy oil belt.

In the Peru block, drilling and other work may exceed 40 million dollars in expenditure.