The petroleum ministry is understood to have agreed to a proposal to increase the equity base of ONGC Videsh Limited, the overseas arm of Oil and Natural Gas Corporation, from Rs 300 crore (Rs 3 billion) to Rs 5,000 crore (Rs 50 billion).

This will help OVL correct its debt-equity ratio, which is around 15:1 at present, and bring it to the level of other global oil majors with which the company has to do business overseas.

OVL has been making aggressive acquisition bids overseas. But it has been doing so through interest-free loans from its parent organisation, ONGC.

Of late, there has been a realisation that for OVL to do business with other oil majors, it has to have a healthy balance sheet of its own, instead of banking on ONGC all the time.

However, the petroleum ministry is yet to decide whether to convert ONGC loans into equity, or to infuse fresh capital.

OVL, which already has giant stakes in the Sakhalin project in Russia and offshore gas projects in Vietnam and Myanmar, is now eyeing big investments in Sudan.

The government has already approved OVL's proposal to acquire 11 per cent stake in a 744 million-barrel oilfield in Sudan for $125.4 million (It will buy from Qatar-based Gulf Petroleum Corp's 6 per cent stake in Block 3 and 7 for $68.4 million and UAE-based Al-Thani Group's 5 per cent stake in the field for $57 million).

Exploration Block 3 and 7, in the Eastern Malut basin of Sudan, are expected to go into production from 2005 and attain a capacity of 10 million tonnes annually. India's share from the blocks will be over 1 million tonnes of crude annually.