ONGC weighs $500 m stake in Gabon block

Oil and Natural Gas Corporation (ONGC), the country's largest oil producer, is considering bidding more than $500 million for a stake in a block in Gabon and is eyeing oil and gas properties in Columbia, Ecuador and Vietnam.

"ONGC Videsh, the overseas arm of ONGC, had identified two blocks in Gabon for bidding, of which one is being considered," petroleum secretary M S Srinivasan told reporters here.

OVL has appointed J P Morgan as the investment banker for the Gabon bid.

It is also looking at properties in Columbia and Ecuador and a $150-175 million investment in a Vietnam property, he said.

OVL has 45 per cent stake in a producing gas field and two exploration blocks in Vietnam. Srinivasan said OVL has two more weeks to decide on investing $3 billion to take up to 5 per cent equity in Russian state oil firm OAO Rosneft, which is making an initial public offer (IPO).

"We had the monitoring committee meeting (to review OVL investments) this afternoon. The proposal for taking stake in Rosneft is still open," he said.

Petroleum secretary said the oil ministry will recommend to the Cabinet increasing OVL's investment limit to Rs 1,000 crore from Rs 300 crore for the Indian flagship overseas acquirer to make quick decisions.

"Time is money in overseas acquisition business. We will be suggesting raising the investment limit of OVL to the Cabinet shortly," he said.

Currently, OVL can make investment decisions of up to Rs 300 crore on its own and beyond this limit it has to go the Cabinet Committee on Economic Affairs.

OVL is in talks for participation in the $11.6 billion IPO provided it is given stake in one of the big-ticket oilfield in Russia. OVL is keen that it be given a stake in big-ticket Sakhalin-3, Vankor or Timano-Pechora oil fields in lieu of investing in Rosneft IPO.

The IPO values Rosneft at between $60 billion and $80 billion. A 5 per cent stake would mean $3-4 billion investment.