BIG SETBACK

New Delhi, Oct. 8: Russia has disqualified Oil and Natural Gas Corporation Ltd (ONGC) from bidding for its Trebs and Titov oilfields, saying the company lacks the financial capability to develop the Arctic fields.

Nord Imperial, ONGC’s Russian subsidiary, failed to reach the qualification round after Russia’s Federal Agency for Management of Mineral Resources scrapped the bid.

ONGC officials termed the disqualification as “flimsy reasoning” but did not divulge whether they would challenge the decision.

The officials said several other players had also been disqualified, and global E&P (exploration and production) players were raising questions about the transparency in the exercise.

The Trebs and Titov deposits — the largest hydrocarbon fields owned by the Russian government — hold around 200 million tonnes of reserves and will be sold at an auction on December 2.

This is the first major oil and gasfield tender in five years by Russia, and analysts said the bidding was a test case of Russia’s commitment towards transparency and fair play in the energy sector.

“The bid clearly mentioned that Nord Imperial will have the financial backing and support of its parents Imperial Energy and ONGC Videsh Ltd (OVL). The Federal Agency for Management of Mineral Resources chose to ignore the letters of financial support from OVL in its decision to disqualify Nord Imperial,” officials said.

Of the six bidders, only Russia’s Surgutneftegaz and Bashneft have been shortlisted to compete for the oil deposits in the Timan-Pechora region of the Arctic circle.

The resource management agency contended that there were “serious reasons for rejecting” the other bids.

According to the agency, Nord Imperial — a unit of ONGC’s Russian arm Imperial Energy — failed to submit the approval of the company’s board or shareholders.