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ONGC bids for Nigerian field

The stake in the yet to be developed Akpo Nigerian offshore field is estimated at $1 billion.

india Updated: Nov 19, 2005 15:37 IST

India's Oil and Natural Gas Corp is bidding for a stake in a Nigerian offshore field with an estimated value of $1 billion as it aims to boost its overseas energy reserves, three sources familiar with the situation said on Friday.

The stake in the yet to be developed Akpo oil and gas field was put up for sale earlier this year by Nigerian firm South Atlantic Petroleum Ltd, which is controlled by former Nigerian Defence Minister Theophilus Danjuma, sources have told said.

Thursday was the deadline for interested parties to submit their bids, according to sources.

The Akpo deepwater field, operated by French oil company Total SA, needs billions of dollars in capital expenditure for development.

"It seems that this will be a good bid from ONGC and if it gets the property, it will be in line with its ambitious plans to add volumes to India's quest for energy security," said Jaspreet Singh, a senior analyst with Indian brokerage firm Prabhudas Liladhar.

Shares in ONGC, India's most valuable company with a market cap of $31.5 billion, gained as much as 1.9 per cent after the news. They were up 1.06 per cent at Rs1,019 by 0912 GMT, outperforming a 0.30 per cent rise in the 30-share BSE index.

The bid marks another overseas push by the state-run Indian energy giant after it got beaten by China's state oil giants in the takeovers of the $4.2 billion Canadian company PetroKazakhstan and the $1.4 billion oil assets in Ecuador sold by North American producer EnCana.

Sources at ONGC and the Indian government said ONGC Videsh Ltd, the main overseas arm of ONGC, was behind the bid. The unit has invested in more than a dozen countries including Russia, Sudan, Myanmar and Cuba.

The sources declined to disclose the size of ONGC's bid. People familiar with the situation have said the asset is worth about $1 billion. Total investment by the winning bidder would reach several billions of dollars if future spending on field development is counted, sources say.

It was not immediately clear who the other bidders were, although there was talk that a couple of Chinese state oil companies have looked at the asset.

Interest in the Nigerian auction has been helped by major offshore discoveries in West Africa and by the recent strong bidding for oil assets in the North Sea and the Gulf of Mexico.

ONGC is keen on Nigeria, Africa's biggest oil producer and the world's eighth-largest oil exporter that produces 2.4 million barrels per day.

Earlier this month, Nigeria signed a deal with ONGC Mittal Energy Limited, a partnership between ONGC and Mittal Steel, the world's largest steel maker, to give oil exploration rights in return for up to $6 billion in infrastructure investment.

The Akpo field was discovered in 2000, and is located 200 kilometres offshore in water depths ranging from 1,100 to 1,700 metres. Energy consultancy Wood Mackenzie estimates Akpo has condensate reserves of over 600 million barrels and commercial natural gas reserves of 2.5 trillion cubic feet.

Total said in May that Akpo would come onstream in late 2008 and was forecast to reach peak production of 225,000 barrels of oil equivalent per day.

Total said it had been authorised by Nigerian National Petroleum Corp. to begin developing the Akpo field on the Oil Mining Licence (OML) 130.

Total holds a 24 percent interest in the OML 130. Other partners are South Atlantic, Nigerian National and Petrobras, according to the statement.

According to an African Website, South Atlantic also holds a stake in Nigeria's Oil Prospecting Licence (OPL) 246, another offshore concession covering the Akpo field.

First Published: Nov 19, 2005 15:37 IST