New Delhi, March 24: Chinese firm CNOOC has outbid ONGC in the race to buy an Ugandan oil block.
The setback for ONGC Videsh Ltd, the overseas arm of the state-owned explorer, comes within weeks of acquiring a major crude oil block in Venezuala where it was the sole bidder.
ONGC’s failure could add weight to the oil ministry’s proposal of setting up a sovereign fund to compete with China in acquiring global oil and gas assets. Officials said, “The failure in Uganda indicates the urgent need to set up a sovereign fund as the country’s energy demands are expected to increase and acquisitions abroad are the only way to ensure energy security.”
“We should encourage acquisition of overseas oil, natural gas and coal assets, including by the private sector,” the Planning Commission has said in its mid-term appraisal of the Eleventh Five Year plan.
Two years back, ONGC had bought Imperial Energy for about $2.2 billion to gain access to fields in Russia.
OVL was keen on Heritage Oil Plc’s 50 per cent share in Block 1 and 3a in the Lake Albert Rift Basin of Uganda. Heritage, however, decided to sell its stake to ENI Spa, Italy’s biggest energy producer, for about $1.5 billion. The deal couldn’t go through as the UK’s Tullow, which held the remaining stake in the Uganda blocks, exercised its right of pre-emption to block ENI.
OVL and Cairn later teamed up to make an offer to Tullow, but Cairn backed out once the Chinese entered the scene.
Cairn was replaced by Oil India and IOC, and the offer was about $2.1 billion. The China National Offshore Oil Corp (CNOOC), however, emerged winner with its $2.5-billion offer.
