ONGC arm may bid for Petrokazakh

Oil and Natural Gas Corporation's (ONGC) overseas arm ONGC Videsh Ltd is likely to bid for buying a Canadian company, Petrokazakh, in Kazakhstan. The bidding process for Calgary-based PetroKazakh is expected to close later this week.

ONGC Chairman Subir Raha and OVL Managing Director R S Butola were reportedly in London recently, where they held discussions with the Kazakh oil companies. The two were attending an international conference on opportunities in the Kazakh hydrocarbon sector.

Petroleum ministry officials said there were some problems with OVL putting in a bid and the government was likely to push Indian Oil Corporation (IOC) as a last ditch effort if the OVL bid did not receive clearance on time. Senior IOC and OVL executives, however, denied that there was any such move.

However, a senior IOC executive added that the company was in talks with five to six mid-sized upstream companies.

The sale of PetroKaz which has a market capitalisation of $2.5 billion was being monitored by investment bankers Goldman Sachs. Officials said a Chinese company was also likely to join the race for PetroKaz which has proved and probable crude oil reserves of 550 million barrels in the South Turgai Basin in the south central part of Kazakhstan.

Officials said there were legal hurdles in acquiring PetroKaz since Russia-based Lukoil had filed a $200-million claim against it at the International Chamber of Commerce's court of arbitration in Paris in connection with a dispute over Turgai Petroleum, a joint venture between the two companies.

Besides, reports from London have added that the Kazakhstan government has forced PetroKaz to cut output by more than a third to comply with environmental regulations.

While not denying that IOC was in the race, senior company executives said they were looking at acquisitions abroad through direct equity purchase in mid-sized companies or through purchase of oil and gas assets.

IOC was separately pursuing exploration blocks in various bidding rounds open in countries like Nigeria, Syria, Libya and Yemen, said an official, adding that ONGC's overseas arm was concentrating in the Central Asia and Russia.