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New Delhi, Aug. 22: The financial backing of steel tycoon L.N. Mittal has failed to help ONGC-Videsh win the race for PetroKazakhstan. China National Petroleum Corporation has emerged as the successful bidder for the upstream oil company.
According to ONGC chairman Subir Raha, the Indian combine lost by “a very narrow margin” to the Chinese bid of $4.2 billion. PetroKazakhstan is the third largest company in Kazakhstan producing around 12 per cent of the country's total crude output.
The Oil and Natural Gas Corporation (ONGC) had earlier formed a private-public sector joint venture with the LN Mittal group to acquire oil and gas assets overseas. However, the gambit has not paid off at least in the first round.
Mittal, who is making a foray into the oil and gas sector, is being cautious compared with the Chinese oil companies, which are aggressively bidding for oil equity abroad.
ONGC-Videsh has lost out to Chinese oil companies several times in the past in the race for overseas hydrocarbon assets. This time, the Mittal factor has also failed to make any difference.
As part of the oil diplomacy, petroleum minister Mani Shankar Aiyar has initiated talks with China for greater co-operation in the hydrocarbon sector. The objective is to reduce the cut-throat competition between Indian and Chinese companies that raises the bids and sharply erodes the gains even for the winner.
An Indian delegation had visited China earlier this month to put in place a mechanism for better co-operation. However, it is evident that commercial considerations dominate in cases of lucrative oilfields and it is difficult to hold back competitive bidding.
Recently, China’s CNOOC Ltd had bid up to $18.5 billion for Unocal of the US. The bid was around $2 billion higher than that of US oil giant Chevron and it was for political reasons that CNOOC could not acquire the company.
ONGC and the Mittal group are looking at offers for stakes in oil and gas fields in Central Asia and Africa, which they hope to pick up through their joint venture company, ONGC-Mittal Energy Ltd.
Energy-rich Kazakhstan and Angola figure at the top of their list. Mittal had earlier said the governments of some of the countries where he had his steel business had invited him to participate in the oil sector as well.
Other countries where the joint venture was eyeing acquisition of hydrocarbon assets are Uzbekistan, Turkmenistan, Azerbaijan and Indonesia.