NEW DELHI: Nearly two years after Kazakhstan blocked India’s USD 5 billion deal to buy stake in the Kashagan oilfield, ONGC Videsh Ltd has said the offer of an alternative mid-sized Abai oil block in Caspian Sea is not attractive enough.
Kazakhstan had in April last year offered OVL a stake in Abai, which was previously being operated by Norway’s Statoil.
OVL, the overseas arm of state explorer Oil and Natural Gas Corp (ONGC), has after one year of studying the field data found it not attractive enough, highly placed sources said.
OVL was offered 25 per cent interest in the Abai block, which according to Kazakhstan government estimates has 2.8 billion barrels of oil reserves. However, the Indian firm believes reserves may not that high.
Sources said the company has not yet formally rejected the offer but indicated it’s reluctance to take a stake in the block ahead of the 12th meeting of the India-Kazakhstan Inter-Governmental Commission on Trade, Economic Scientific, Technological, Industrial and Cultural Cooperation here.
Kazakhstan had in July 2013 blocked OVL’s USD 5 billion deal to buy an 8.4 per cent stake in the Kashagan oilfield, the world’s largest oil find in five decades, from US energy giant ConocoPhillips.
Kazakhstan exercised its pre-emption right to first buy the ConocoPhillips’ stake and then sell it off to Chinese firm — China National Petroleum Corporation (CNPC). In 2005, India had lost a USD 4.18 billion deal to buy PetroKazakhstan to China.
At the time of the offer for Abai was made, it was stated that Kazakhstan realises that they were more than unjust to India and have put all their eggs in one basket i.E. China.
Statoil had in February 2013 given up the Abai offshore block spending about seven years negotiating to start exploration.
Kazakhstan’s state-owned KazMunaiGaz National Co held 75 per cent interest in the block with an estimated 387 million tonnes of resources (2.8 billion barrels). Statoil had 25 per cent interest which had been offered to OVL.
Delays and cost overruns have dogged Kazakhstan’s efforts to expand offshore production of oil and gas. OVL had planned to drill two exploration wells on Satpayev in 2014 and 2015 but delivery of a drill rig has been delayed and will start drilling next month.
There has been satisfactory progress on this project. We expect exploratory drilling to commence early next month,” Oil Minister Dharmendra Pradhan said at the joint meeting.
OVL Managing Director N K Verma said the company has already invested USD 150 million in Satpayev and will invest a total of USD 400 million in exploration.
