Indian Oil Corporation and ONGC Videsh Ltd have tied up with BP and Occidental, the global oil majors, to bid for oilfields in Kuwait.
Britain's BP with 65 per cent stake is the leader of the consoritum. Occidental of US has 25 per cent stake, while IOC and OVL have the remaining 10 per cent, industry sources said.
The BP-led consortium is one of the three consortiums in race for Project Kuwait, which aims to increase production from a cluster of fields along the border with Iraq.
The others in race to manage and upgrade oilfields in northern Kuwait include a consortium led by ChevronTexaco with a 50 per cent stake; other partners are Total of France with 20 per cent and Petro-Canada, Russia's Sibneft and Chinese group Sinopec with 10 per cent each.
The third group is led by Royal Dutch/Shell and includes Exxon Mobil and Conoco Phillips as partners.
Project Kuwait is $7billion, 20-year plan to increase the output of five northern oil fields -- Abdali, Bahra, Ratqa, Rawdhatain and Sabriyah -- from 450,000 barrels per day to around 900,000 bpd by the year 2006.
Unlike production sharing agreements, Kuwait will sign technical service contracts that will allow it to retain ownership of reserves, control over oil output, and strategic management of the venture, sources said.
The winning consortium will be paid a "barrel" fee as well as allowances for capital recovery and incentive fees for increasing reserves in their role as service provider, they said.
If IOC-OVL consortium succeeds, Kuwait would become the second country where Indian firms have taken equity in a oil field.
Earlier, OVL, the overseas investment arm of Oil and Natural Gas Corporation, had bought 25 per cent stake in a 240,000-barrel per day Greater Nile Oil Project in Sudan, sources said, adding three parcels totalling 2.5 million barrels have already been shipped to India.
Equity oil abroad augurs well for India, which is 70 per cent import dependant.
Sources said IOC and OVL have been included in BP's consortium as financial partners and would be required to pump money in oil field development.
The three consortiums have been asked to submit by September a broad plan for development of the northern fields.
The award of the contract was likely by the year-end, they added.