China, India bid for Kazakh oil firm
India's ONGC, China's CNPC in race to grab overseas oil and gas assets in the pvt Kazakh oil firm Nations Energy.india Updated: Dec 08, 2005 18:28 IST
The flagship state oil firms of China and India are considering bidding for privately owned Kazakh oil producer Nations Energy, which has put itself up for sale in a deal that could be worth $2 billion, sources familiar with the process said on Wednesday.
Canada-based Nations Energy, whose biggest asset is a large heavy-crude oilfield in Kazakhstan, could find a buyer early next year, becoming the latest to capitalise on strong demand from the huge Asian nations for oil to drive their booming economies.
"There is a formal process that just started recently," one source, who declined to be identified, told Reuters.
India's Oil and Natural Gas Corp (ONGC) and China National Petroleum Corp (CNPC) may bid as both countries race to grab overseas oil and gas assets, the sources said.
CNPC, the parent of Hong Kong- and New York-listed PetroChina , beat out ONGC in its $4.2 billion takeover of PetroKazakhstan, another big independent Kazakh producer. China has direct access to Kazakh crude via a new pipeline.
Nations Energy is owned by private Indonesian investors and run by company President Hashim Djojohadikusumo. It had an after-tax profit of $80.5 million on revenues of $277 million in the first nine months of 2004, its Web site says.
China and India have gone head-to-head in a number of big oil and gas asset sales this past year, with CNPC also taking a $1.4 billion Ecuador package, but ONGC winning a $1 billion-plus Nigerian oilfield selloff by little-known South Atlantic Petroleum, a source said last week.
Despite the rivalry, the two are also teaming up to bid for Petro-Canada's $1 billion Syrian assets, although analysts have said the union was likely to be short-lived given their governments' increasing anxiety over energy security as oil prices and national imports continue to rise.
Credit Suisse First Boston (CSFB) is representing Nations Energy in the transaction, the sources said.
An ONGC spokesman declined to comment. Spokespersons for CSFB and CNPC were not immediately available for comment.
Nations Energy pumps more than 50,000 barrels per day (bpd) of oil, most of that crude from the Karazhanbas field in Kazakhstan, which has proven reserves of more than 400 million barrels, the company says on its Web site, last updated in 2004.
That oil has an API density of 19 degrees, exceptionally heavy, making it more difficult to refine into high-value fuels and lowering its value relative to Western oil benchmarks.
Karazhanbas was discovered in the 1970s, but output was declining until Nations Energy bought it in 1997, raising production from 5,000 bpd in 1999 to 35,000 bpd in 2003, the Web site says.
Nations Energy, which also has offices in Houston and Geneva, has since 2003 run the Karasu Operating Company (KAOC) in Azerbaijan, where production from its Mishovdag and Kelameddin oilfields averaged about 4,000 bpd as August 2004.