Indian oil team plans $5-bn Caspian buy | business | Hindustan Times
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Indian oil team plans $5-bn Caspian buy

business Updated: Jun 07, 2011 22:39 IST
Anupama Airy

In what could make India part of one of world's largest oil fields — the Kashagan oil field in Kazakhstan territory in the Caspian Sea — a consortium led by ONGC Videsh Ltd (OVL) and GAIL are planning to acquire a 8.4% stake from ExxonMobil in this oil and gas rich field for an estimated $5 billion (Rs 22,500 crore).

Hindustan Times is in possession of documents, as per which the OVL-led Indian consortium has submitted a non-binding but firm indicative bid to ExxonMobil for buying 50% of its 16.81% stake in the Kashagan oil field.

Kashagan, discovered in 2000, is the world's largest oil discovery since Prudhoe Bay in Alaska in the 1960s. Production at the field is expected to begin in early 2013.

"Discussions are on with Exxon Mobil Kazakhstan Inc (a company incorporated in Bahamas) and a final call on our participation and investment will be taken by the Cabinet," confirmed an official associated with the Indian consortium's acquisition process.

OVL's managing director, Joeman Thomas, did not respond to HT despite repeated attempts.

The oil- and gas-rich field may pose a lucrative option for India, but it is also one of the world's costliest and technically challenging fields due to its location in the hostile northern Caspian region with over 100 kmph winds and flying ice chunks.

However, 41 billion barrels of oil and 18 trillion cubic feet of gas reserves lured many Western and other firms into the project. The consortium of international oil and gas majors currently developing the field has Shell, Eni, ExxonMobil, Conoco Phillips, Total, Inpex and KazMunaiGaz.

The cost of developing the Kashagan oil field in three phases is estimated at close to $200 billion.

ONGC Videsh, GAIL and Petronet LNG also plan to invest close to R15, 500 crore to secure a 15% stake in Novatek's $30 billion LNG project in the Yaman peninsula of Russia, as first reported by HT on May 27.

Novatek, Russia's largest independent gas producer, will retain 51% equity in the project and giv the balance to potential investors.