Mittal Investment Sarl, the holding firm of the Mittal family's interest in the world's largest steel firm ArcelorMittal, had in April 2007 acquired 25 per cent stake in Caspian Investments Resources from Russian oil firm Lukoil for $980 million.

The acquisition was originally to be done by ONGC Mittal Energy Ltd (OMEL), the equal joint venture of OVL and Mittal Investment, but the India-born billionaire went ahead on his own citing opposition to OMEL from Lukoil. He had since been delaying transferring the assets to OMEL citing opposition to such a move by the Kazakhstan government.

But having lost a fortune in the global economic meltdown, Mittal is now keen on selling half of his stake in CIR, or 12.5 per cent, to OVL, industry sources said.

Mittal, they said, will use these proceeds to fund his share of the $400-million expenditure planned in the Satpayev block in the highly prospective North Caspian Sea.

Kazakhstan had earlier this year agreed to give OMEL 25 per cent in Satpayev block that can produce 2,87,000 barrels of oil per day from the 256 million tonnes of recoverable reserves.

Sources said Mittal has opened dialogue with OVL for selling stake in CIR but it was not immediately clear if the overseas arm of the Oil and Natural Gas Corporation (ONGC) will have to pay half of $980 million or a little premium over that.

OVL is currently carrying out the due diligence of CIR and if it chooses not to participate in CIR, Mittal Investment would relinquish its share in the Satpayev block in favour of the state firm.

Though a new energy law in Kazakhstan has put barriers for transfer of the ownership, Mittal was trying to get an exemption.

Kazakhstan's new law stipulates its' national oil firm KazMunaiGaz taking half of ownership at every equity transfer thereby nationalising most of the oil and gas field in the country over the next decade or more.

CIR has equity in five Kazakh oil fields - Alibekmola, Kozhasai, Northern Buzachi, Karakuduk and Arman - in the Aktyubinsk and Mangistau regions. Current production from the fields, which have total proven reserves of some 270 million barrels, is more than 40,000 barrels per day and is set to increase in the coming years.

Sources said for Satpayev, OMEL will pay $13 million as signature bonus and has committed $307 million in exploration expenditure.

Kazakhstan is one of the 10 countries Mittal had originally identified for exclusive pursuit of hydrocarbon opportunities in JV with ONGC. The state-run firm wanted to use Mittal's clout with the governments in Africa and Central Asia particularly Kazakhstan to bag oilfields.

Mittal and ONGC had in July 2005 agreed to participate on an exclusive basis through OMEL in Angola, Azerbaijan, Congo Brazzaville, Democratic Republic of Congo, Indonesia, Romania, Kazakhstan, Trinidad and Tobago, Turkmenistan and Uzbekistan.

Mittal Investment and Lukoil now hold 25 per cent stake each in Caspian Investment Resources. The rest is with KazMunaiGaz.

Lukoil had used Caspian Investments Resources to buy Kazakh oil producer Nelson Resources for $2 billion in 2005. Initially, OVL was also looking at acquiring Nelson Resources.