NEW DELHI (Dow Jones Newswires), Apr. 13, 2011
Oil & Natural Gas Corp. will sign an agreement Saturday to purchase a 25% stake in the Satpayev exploration block in Kazakhstan, the chairman of India's biggest explorer said Wednesday.
"The government [of India] has approved a total investment plan of $400 million. This includes a signature bonus of $13 million and $80 million as a fee for taking the stake in the block," A. K. Hazarika told Dow Jones Newswires.
"The rest will be spent on exploration activities."
The deal will mark another success by ONGC in its attempts to buy oil and gas assets overseas to secure energy supplies for the world's fastest-growing major economy after China. The state-run company, which has been witnessing a decline in production at its aging fields in India, has in the past missed out on several overseas oil and gas asset acquisitions, especially to cash-rich Chinese companies in western Africa.
Kazakhstan's Satpayev exploration block is located in a hydrocarbon-rich region of the North Caspian Sea, off the country's south-western coast.
KazMunaiGas, Kazakhstan's national oil company, will hold the remaining 75% stake in the block.
The initial agreement for the stake sale was signed in 2009, but the governments haven't so far disclosed the valuation for the stake transfer.
ONGC had originally sought the 25% stake in association with Lakshmi Niwas Mittal's Mittal Investments Sarl, but the billionaire, who owns a steel mill in the central Asian nation, pulled out of the venture in November 2009, leaving ONGC to pursue the deal on its own.
ONGC will likely purchase the stake in the Satpayev block via its overseas investment unit, ONGC Videsh Ltd.
Hazarika said the agreement will be signed during Indian Prime Minister Manmohan Singh's visit to Kazakhstan for bilateral meetings. Singh will visit Kazakhstan Friday and Saturday.
The Indian government is pushing state-run explorers to expedite acquisitions of overseas exploration and producing assets as a possible hedge against fluctuations in global crude oil prices and save on precious foreign exchange. The South Asian country imports four-fifths of its crude oil requirements.
Earlier Wednesday, the Hindustan Times reported that a peak output of 287,000 barrels per day is envisaged from the 256 million tons of reserves in the Satpayev field.
Hazarika declined give details on the reserves. "That has to be seen," he said.
Copyright (c) 2011 Dow Jones & Company, Inc.
Most Popular Articles
From the Career Center
Jobs that may interest you