ONGC averse to Hinduja venture

State-run Oil and Natural Gas Corporation (ONGC) is resisting the formation of a joint venture with the Hinduja group for acquisition of oilfields abroad as it feels that the JV will only create competition for its overseas arm ONGC Videsh (OVL) and its successful venture with steel czar Lakshmi N Mittal.

ONGC on Tuesday signed a pact with the Hinduja group to form a joint venture for sourcing liquefied natural gas (LNG) but deferred an agreement for floating a separate venture for acquisition of oil and gas fields abroad. "We think we can leverage the clout of the Hinduja group in the Gulf region in pursuing LNG and linked exploration and production business, but creating another firm to look for oil will only create competition for OVL, which already has a sizeable presence in the region," a top official said.

OVL already has oil properties in Iran, Iraq, Syria, Qatar and Libya and was actively pursuing opportunities in Kuwait, Oman, Saudi Arabia and UAE. These are the same countries where the ONGC venture with Hinduja group firm Ashok Leyland Project Services (APLS) will search for LNG. "Moreover, another company for oil and gas field acquisition will only confuse the world... They will not know who to deal with "� ONGC/OVL or ONGC-Mittal Energy (OMEL) or a newer ONGC-Hinduja combine," the official said.

Sources said Hindujas wanted to replicate the landmark ONGC-Mittal agreement. With Mittals, ONGC created two firms "� OMEL for acquisition of oilfields and ONGC Mittal Energy Services for trading, shipping and terminaling services.

Hindujas wanted ONGC to form a venture with Gulf Oil Corporation for oilfield acquisition, a proposal which was deferred.

ONGC is to hold 49.98 per cent stake in the venture, while ALPS is to get 48.02 per cent. The remaining 2 per cent will be held by banks and financial institutions. The official said the ONGC was keen on leveraging the expertise of Hindujas in the Gulf region, particularly, in Iran and Qatar. , to source LNG for its proposed Rs 25,000 crore Mangalore Integrated Project that includes an LNG import terminal, a 1,445 mw power plant and a basic petrochemical complex.

The MoU between ONGC and ALPS provides sourcing of LNG at competitive terms. Besides, the ALPS will be invited to participate in joint development of LNG-based downstream projects at ONGC's Mangalore SEZ like LNG-regasification, power, petrochemicals.

ONGC had last year signed an MoU with Ashok Leyland Project Services, a Hinduja Group company, to float a 50:50 joint venture to invest in LNG terminals with associated power, petrochemicals, gas pipeline grid projects and related opportunities in southern India.

The MoU called for the Hindujas to play a lead role in importing up to 10 million tonnes per annum of LNG and jointly set up power plants with a capacity of between 1,000-1,800 mw.

"Tuesday's agreement is culmination of the talks held over the last one year," an ONGC official said.

ONGC had for its JV with Mittals Kazakhstan, Turkmenistan, Azerbaijan, Uzbekistan, Congo, Angola, Trinidad and Tobago, Romania and Indonesia as priority areas for doing business. OMEL has already got two oil blocks in Nigeria.