ONGC-Mittal buys 30% in overseas block

ONGC Mittal Energy (OMEL), a joint venture between ONGC Videsh (OVL) and LN Mittal-promoted Mittal Investment, has acquired a 30 per cent stake in an offshore exploration block in the Caspian Sea, Turkmenistan.

The stake buy in block 11-12 is the joint venture's fourth asset. OMEL had earlier acquired interest in a producing asset in Syria, currently producing about 130,000 barrels of oil per day.

The OVL-Mittal joint venture had also bagged two blocks in Nigerian deepwater, OPL 279, in which OMEL has 40 per cent stake, and OPL 285, in which the company owns 60 per cent, the other partners being French oil major Total, and Nigerian EMO.

The Turkmenistan block covers an area of 5,663 sq km and is located close to discovered and producing fields.

"It (the block) contains a number of prospects with significant reserve potential. Discoveries have (also) been made in adjoining areas (of the block)," ONGC said in a statement.

The block had been awarded to Danish company Maersk Oil by the government of Turkmenistan in December 2002. With OMEL picking up 30 per cent stake, Maersk's participating interest has dipped to 36 per cent. German company Wintershall owns the remaining 34 per cent.

"Wintershall and Maersk have acquired seismic data and drilled one exploratory well in the block. The well provided indications of hydrocarbons. Another well is planned to be drilled by the new consortium during 2008," ONGC said.

The stake buy by OMEL comes at a time when the joint venture has been perceived by various sections to be moving slow on acquiring oil and gas assets.

LN Mittal's acquisition of Russian company Lukoil's assets in Kazakhsthan on his own had also fueled speculations that his joint venture with OVL was in danger. Mittal, however, in July this year had said that the Kazakhsthan asset would be transferred to OMEL at an opportune time.

ONGC Chairman and Managing Director R S Sharma had told Business Standard earlier this month that OMEL was working towards buying exploration assets overseas.

"OMEL is also pursuing hydrocarbon assets in other countries as well, some of which are in an advanced stage of negotiations," the ONGC statement said.

The statement added that both the promoter groups expressed satisfaction at the evolving growth of OMEL and stated that the investment in Turkmenistan shall open up new opportunities for growth in the country.

Shares of ONGC closed at Rs 1,097.80 rupees on the Bombay Stock Exchange, down 0.93 per cent from close on Friday.