Stung by the Kazakhstan Government’s decision to block ONGC Videsh ltd’s (OVl) deal to buy ConocoPhillips’ 8.4 per cent stake in its Kashagan oilfield for $5 billion, India plans to officially register a protest if the Central Asian nation gives the stake to China. Then India will seek an equally profitable block from it.
Sources told The Pioneer that Petroleum Minister M Veerappa Moily, who is planning to visit Kazakhstan in September this year, will take up the matter with his counterpart in Astana.
An alternative profitable block in lieu of the blocked deal is considered to be fine, considering the otherwise friendly relations between the two nations share with each other, sources privy to the development said.
New Delhi is peeved with the Kazakhstan Government’s decision to block the Kashagan deal, as not only OVl’s offer was “quite attractive” financially (at $5 billion offered to ConocoPhillips’), it was also the largest acquisition ever by the state-owned explorer’s overseas arm. Kashagan incidentally is also the world’s largest oil find in five decades.
Keeping these factors in mind, the Petroleum Ministry did not expect a volte face from Astana, though official sources conceded that China has always been a threat to India in such kind of deals.
Notwithstanding the Chinese threat, the Petroleum Ministry was quite confident that the Kazakhstan Government would approve OVl’s acquisition of ConocoPhillips’ stake.
Sources said that as of now using its pre-emptive powers, the Kazakhstan Government has blocked the OVl’s acquisition and has kept the assets with it, since according to the Kazakh law, it has the right to buy any oil asset for sale in the country at the price agreed on by buyer and seller.
Accordingly, Kazakhstan’s national oil company KazMunaiGaz has bought back the US oil company’s 8.4 per cent interest in Kashagan for $ 5 billion (the price which was decided between ConocoPhillips and OVl).
However, if New Delhi gets confirmed information that KazMunaiGaz has decided to sell that stake to China National Petroleum Corp (CNPC) and that too at a higher price, then it will officially protest the Kazakh Government’s decision.
Incidentally, India has lost at least $12.5 billion worth of petroleum deals to China over the past many years. CNPC beat India by agreeing to pay $4.18 billion in August 2005 for PetroKazakhstan, then China’s biggest overseas oil deal.
The Chinese firm had trailed ONGC and its partner lakhsmi N Mittal’s $4 billion bid at the close of bidding on August 15, 2005. But post-close of bidding, it was allowed to raise the offer price to $4.18 billion, which saw PetroKazakhstan, a Canadian oil firm operating in Central Asia, go to CNPC.
A month later, CNPC again outbid ONGC in buying assets of Encana Corp in Ecuador for $1.42 billion. In March 2010, ONGC lost out on acquisition of oil Block 1 and 3A in Uganda oilfields to a Chinese entity, which had offered as much as $2.5 billion for the 50 per cent stake.