ONGC gets project operator's nod for $5b Kashagan stake buy

Tags: Companies
State-owned ONGC, which trumped a strong bid by arch-rival China National Petroleum Corp to bag ConocoPhillips' stake in Kazakhstan's giant Kashagan oilfield, has won project operator Eni's approval for its $ 5 billion acquisition.

In its biggest acquisition till date, ONGC Videsh Ltd, the overseas arm of Oil & Natural Gas Corp last month agreed to pay US energy giant ConocoPhillips about $ 5 billion for the 8.4 per cent stake in Kashagan, the biggest oilfield discovery in over four decades.

The deal is subject to the approval of governments of Kazakhstan and India and also to other partners in the Caspian Sea field waiving their right of first refusal.

Industry sources said Italy's Eni, the operator of the first phase of the Kashagan oilfield that is due to start production in second quarter of 2013, has publicly stated that it will not pre-empt or block the sale.

Eni, ExxonMobil of US, Royal Dutch Shell, France's Total and Kazakhstan's Kazmunaigas (KMG) hold 16.81 per cent stake each in the field, while Japan's Inpex the remaining 7.56 per cent.

Sources said the partners have 60 days to decide on exercising their right of first refusal on ConocoPhillips' stake.

Once all the other five companies in the project waive their pre-emption rights, the deal will go before Kazakhstan government, which contractually has 180 days to clear it.

Sources said on the previous two occasions when companies sold out of Kashagan, the other partners pre-empted.

Originally, Kashagan field had Eni, BG Group of UK, ExxonMobil, Shell, Total and Kazakh government with 14.28 per cent stake each. BP had 9.52 per cent and Norway's Statoil 4.76 per cent.

Inpex of Japan and ConocoPhillips entered the consortium in 1998, purchasing Kazakhstan's 14.28 per cent share.

In 2001, when Total agreed to buy BP and Statoil's stakes, all other partners exercised their pre-emption rights and the stake was equally split among them. Subsequently, the shareholding in the project was -- BG, Eni-Agip, ExxonMobil, Shell and Total (16.67 per cent each), ConocoPhillips and Inpex (8.33 per cent each).

Then again in 2003, when BG agreed to sell its 16.67 per cent interest to Chinese state duo Sinopec and China National Offshore Oil Corp (CNOOC), the pre-emption rights were exercised. Kazakhstan purchased half (8.33 per cent) of BG's share while other consortium members shared the remaining.

In 2008, a new contract was signed wherein KMG's share was doubled from 8.33 per cent to 16.66 per cent with other partners taking proportionate cuts.

Under Kazakh law, KMG would have the first option to purchase Conoco's stake and in October the company had publicly expressed interest in Conoco's holding.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Jaitley must have a workable gameplan

    While governments, irrespective of their political hues, cannot be faulted for mobilising non-tax revenues, overtly relying on these sources of fundin

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Urs Schöttli

It’s time for Japan to step out of its shell

The execution of a Japanese hostage by ISIS has sho­cked ...

Zehra Naqvi

The urge to tell stories

One wants to tell a story, like Scheherzade, in order ...

Bubbles Sabharwal

Truth about truth

The question to ponder is, “is it the truth because ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture