"We are exploring the possibilities of joining hands with ONGC in taking up oil exploration and production activities in Arab countries and Algeria," Gail chairman and managing director C R Prasad told PTI.

Gail's move follows recent cross-holding by the two public sector undertakings (PSUs), under which ONGC picked up five per cent stake in gail and the gas marketing company picked up 2.5 per cent stake in ONGC.

Prasad said the two have identified potential areas where both could jointly take up exploration and production activities in India and abroad. While ONGC paid about Rs 700 crore to pick up the stake in Gail, the latter paid about Rs 1400 crore for 2.5 per cent stake in the exploration company.