State-run Oil and Natural Gas Corp and GAIL India plan to offer $2 billion (Rs 9,800 crore) to acquire Africa-focused gas explorer Cove Energy, a local media report said, joining a bidding war over the UK-listed company.
The offer would beat a $1.77 billion bid by Thai state-controlled oil and gas group PTT and Royal Dutch Shell Plc's offer worth $1.6 billion earlier this month, which already represented a 70% premium to Cove's share price when it announced plans to sell in January.
ONGC Videsh Ltd, the overseas investment arm of oil explorer and producer ONGC, and GAIL could make their combined bid this week, the Times of India newspaper reported on Tuesday, citing sources familiar with the matter.
The state-run consortium may value London-listed Cove at 245 pence-a-share, the report said.
Officials at ONGC Videsh and GAIL could not be immediately reached by Reuters.
PTT said on Friday it planned a 220 pence-per-share bid with a proposed offer worth 1.12 billion pounds, trumping Shell's offer for Cove. PTT declined to comment on the newspaper report on Tuesday.
The emerging battle reflects intense industry interest in East Africa, a previously little-explored area which is tipped to become a major natural gas producing region.
Cove's main asset is an 8.5% stake in Mozambique's Rovuma Offshore Area 1, where another operator Anadarko said recoverable reserves could top 30 trillion cubic feet of natural gas.
Bharat Petroleum Corp and Videocon Industries Ltd own a 10% stake each in the Rovuma block.
Cove kicked off a sale process in January, and Shell attempted to pre-empt rivals by making an early 992 million-pound offer proposal, which was described by analysts when it was announced as stretched .
Companies eyeing Asia's rapid growth have been keenly seeking opportunities to buy up global resource assets.
Indian steel, power and coal companies have been scouting for overseas coal mines to satisfy demand from the fast-growing economy, Asia's third largest.
But state-run companies such as Coal India , GAIL and ONGC have not been particularly successful in closing large overseas acquisitions in recent years and have shied away from bidding wars despite sitting on huge piles of cash.
An Indian state consortium of five companies in January last year decided not to counter Rio Tinto's $3.9 billion bid for Australian miner Riversdale, after hiring a consultant and spending weeks weighing bid options.
