ONGC Videsh in talks to buy oil, gas blocks in Kazakhstan
Sept 25. PTI
ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), is in talks to acquire more oil and gas blocks in Kazakhstan after losing a giant Caspian sea oil field deal to China National Petroleum Corp.
ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp, is in talks to acquire more oil and gas blocks in Kazakhstan after losing a giant Caspian sea oil field deal to China National Petroleum Corp. “One failure does not mean we stop operations in the country completely,” OVL Managing Director D K Sarraf told reporters here. Kazakhstan had recently blocked OVL’s USD 5 billion deal to buy a 8.4 per cent stake in its giant Kashagan oil field and instead transferred the interest to CNPC.
“We continue to be engaged in Kazakhstan. We are in the process of identification of more blocks at exploration and development stage (for acquisition),” he said. OVL had last year struck a deal to buy US giant ConocoPhillips’ 8.4 per cent stake in the giant Kashagan offshore oil project in the Caspian Sea. While the partners in the project approved the transaction, Kazakhstan in July exercised its preemptive buy-out right and acquired the 8.4 per cent stake ConocoPhillips held in Kashagan.
Kazakhstan’s national oil and gas producer KazMunaiGaz bought the stake as a representative of the Kazakh state at the same price as agreed between OVL and ConocoPhillips. This month, KazMunaiGas signed a deal to sell that stake to CNPC for about USD 5 billion.
Under the deal, China will help arrange a loan of up to USD 3 billion for KazMunaiGas to help it finance the second stage of Kashagan’s development, due to begin after 2020. KazMunaiGas entered the Kashagan consortium as a shareholder in 2005 and has since then doubled its stake to 16.81 per cent.
Exxon Mobil, Royal Dutch Shell, Italy’s Eni, Total of France and KazMunaiGaz each hold 16.8 per cent of Kashagan. Japan’s Inpex Corp has 7.56 per cent stake. The Kashagan field, located in the shallow waters (about 5-8 metres) of the Kazakh North Caspian Sea, is the world’s largest current development project.
The field, which is set to produce 370,000 barrels of oil a day, started output this month, eight years later than initially planned and with costs nearing USD 48 billion, double the early estimates. It holds an estimated 35 billion barrels of oil in place reserves.
Sarraf said OVL continues to hold 25 per cent stake in the Satpayev oil block of Kazakhstan. Also, OVL is actively pursuing exploration bid rounds in Australia, Bangladesh, Myanmar and Lebanon.