New Delhi: Indian state-run explorer Oil and Natural Gas Corp may be in the process of firming up a proposal to buy up to 33 per cent in an Egyptian deepwater gas block from operator Royal Dutch Shell, reports quoting government sources have said.

According to these reports, talks are at an advanced stage. The deal is for a stake in Shell''s North East Mediterranean Deepwater (NEMED) block. The block, in which Shell holds 84 per cent, has probable reserves of 15-trillion cubic feet, according to a US department of energy website.

According to industry sources, the block holds initial in-place reserves of more than 1 tcf with "sizeable upside."

Malaysian state oil and gas company, Petronas, owns the remaining 16 per cent in the deepwater concession, which was awarded in 1999.

ONGC Videsh Ltd., the overseas investment arm of ONGC, has to obtain government permission for any deal that exceeds either $75 million or Rs3 billion, whichever is lower.

ONGC Videsh has been asked to target production of 6.34 million tonnes of oil and 1.65 billion cubic metres of gas in the 2007/08 fiscal, the government said on Thursday.

To secure more equity oil, the company is pursuing oil and gas assets in Sudan, Iran, Iraq, Nigeria, Algeria, Egypt, Syria, Libya, Russia, Venezuela, Kazakhstan, Azerbaijan. ONGC Videsh and its partner IPR Red Sea Inc. recently made a significant new oil find in the Gulf of Suez.