When the news of steel baron LN Mittal getting into the energy sector without his Indian exploration and production partner, Oil and Natural Gas Corporation surfaced, there was much speculation about whether the alliance was on the verge of a break-up.
Especially as Mittal's midas touch, which was supposed to swings things in India's and ONGC's favour, seemed not to have had much success.
Mittal Investments recently picked up 49 per cent stake in HPCL's Bhatinda refinery and 50 per cent in the Russian Lukoil's Caspian fields for $980 million.
Mittal has also picked up 3 per cent stake in Chevron's under-construction $ 6 billion Olokola Liquefied Natural Gas (OK-LNG) project in Nigeria.
Mittal Steel has also signed a pact with Total of France to jointly acquire oil and gas properties particularly in Africa and trade oil and gas produced from these fields.
While the ONGC-Mittal Energy Ltd has landed three oil blocks in Nigeria, progress on the second JV, ONGC-Mittal Energy Services Limited has been slow.
But ONGC chairman R S Sharma seems not too perturbed. Says Sharma, "We have a JV and it is very clear on what areas we will collaborate. Both they and we are free to collaborate with others in all the other areas."
The JV identifies E&P collaboration in 10 countries where the two partners would participate in the hydrocarbon business on an exclusive basis, another 17 countries where the two would work together on a project-by-project basis.
On OMEL, Sharma quips, "We will look at trading in energy soon, but let's get the energy first."
Says Yogesh Garg, CEO of Infraline Energy, an energy consulting firm, "For Mittal, the stake they picked up in HPCL's refinery project was small change. It could be an outlet for the oil they expect to find elsewhere. But this was also typical of Mittal's strategy of picking up sick units or units in trouble. In that sense the HPCL Bhatinda refinery, which HPCL was having trouble finding a partner for, is typical of what we have seen of Mittal strategy in steel so far."
"But I don't see a break in the ONGC tie-up which was meant to leverage the Mittal clout in countries where they are looking to leverage their strong presence in steel into other big ticket businesses like oil and gas, with ONGC bringing in the E&P experience," adds Garg.
Ajay Bagga, partner at Ernst and Young, points out that it is only to be expected of the Mittal group to seek different partners for its global oil and gas business.
"It depends on what part of the globe they are going to and who has a strong presence in those parts. It make sense for them to tie up with a Lukoil or Total if they are seeking oil fields in areas where these companies are strongly present. And the same is true for ONGC."
Industry sources say Mittal is looking at taking stakes in big oil and gas projects in Africa and Central Asia, in addition to its Nigerian fields.
Meanwhile, ONGC too has signed a deal with the Hinduja group for souring LNG and is negotiating an exploration and production agreement with the group.
The Hindujas have been talking about setting up a refinery in Asia for sometime now. Should the ONGC-Hinduja tie up in E&P fructify, the business would have access to both refining and marketing, given the Hindujas presence in oil marketing through Gulf Oil which markets lubricants.
How has OMEL done?
For an 18 month-old company, OMEL has done impressively well. Although it was beaten by China in its bid for the Kazakh oil giant Petrokazkh, it more than made up with Nigeria.
OMEL has signed an agreement with the Nigerian government, which will give it access to 32.5 million tonne of crude oil per annum, more than ONGC and ONGC Videsh's current production of 31.5 million tonne.
OMEL is also in the process of being awarded another prosperous exploration block in Nigeria.
The company has a $ 6 billion investment commitment in Nigeria and proposes to build an export-oriented refinery there.
The company holds part of equity in the Syrian Al Furat producing oilfield where ONGC's overseas investment arm ONGC Videsh had acquired stake through its Netherlands-registered Sudan operations subsidiary, ONGC Nile Ganga BV.
OMEL is also in an advanced stage of signing a farm-out agreement in respect of an exploration block in Turkmenistan.OMEL has recently bid for an offshore block in Trinidad & Tobago. In addition, OMEL is looking for various opportunities including in Kazakhstan, Turkmenistan, Azerbaijan, Indonesia, which are at different stages of progression.