China stonewalls ONGC's Kazakh deal

Kazakh govt would exercise its right of first refusal and acquire the 8.4% stake held by ConocoPhillips

In what can be termed as a Chinese coup in the oil & gas sector and a diplomatic blow to India, the China National Petroleum Corp (CNPC) has managed to overturn Oil and Natural Gas Corporation (ONGC)'s $5-billion bid for ConocoPhillips' stake at Kashagan oilfield in Kazakhstan, with the help of the local government.

According to a Bloomberg report, the Kazakh government would exercise its right of first refusal and acquire the 8.4 per cent stake held by ConocoPhillips in the nation's biggest oil field, squeezing out ONGC. The government would carry out the deal through state-owned KazMunaiGaz National Co; the stake is likely to be transferred to Asia's largest oil refiner CNPC.

The country's oil & gas ministry has already informed ConocoPhillips it would buy the US oil company's stake in the Caspian Sea. This can be considered as an end to Indian dreams in Kazakhstan by China with the aid of the Kazakh government, as ONGC Videsh Limited (OVL) had managed to strike an understanding in November with ConocoPhillips - world's fifth largest refiner - to buy its share in the field for $5 billion.

OVL's managing director D K Saraf said, "We are yet to get any official confirmation from the seller." The deal between ConocoPhillips and OVL was subjected to the first right of refusal of the Kazakhstan government and other stakeholders in the Kashagan field. Other than KazMunaiGaz, Kashagan's consortium partners include Eni, Total, Shell and ExxonMobil - each with 16.8 per cent stake, while ConocoPhillips has 8.4 per cent and Inpex with 7.56 per cent participating interest.