News APP

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  gplay

Rediff.com  » Business » Oilfield: Mittal signs deals with Total, Lukoil

Oilfield: Mittal signs deals with Total, Lukoil

By Ammar Zaidi in New Delhi
December 12, 2006 17:38 IST
Get Rediff News in your Inbox:
In the first signs of falling apart of the pact it had with ONGC, the world's largest steel producer Mittal Steel is believed to have entered into separate deals with Total of France and Lukoil of Russia for acquisition of oilfields in Africa and Central Asia.

Mittal Steel, which had last year announced its entry into oil and gas business through two joint ventures with Oil and Natural Gas Corp, has already on its own picked 3 per cent stake in Chevron's under-construction $6 billion Olokola liquefied natural gas (OK-LNG) project in Nigeria.

Industry sources said Lakshmi N Mittal is not happy with the progress of ONGC-Mittal Energy Services Ltd (OMESL), a JV company that was to trade and ship oil and gas including LNG.

Mittal Steel, in June, had signed a pact with Total to jointly acquire oil and gas properties particulary in Africa and trade oil and gas produced from such fields. Last month, it signed with Lukoil for specific acquisitions in Central Asia, particularly Kazakhstan.

The officials of neither Mittal Steel nor Total could be immediately reached for comments.

While the ONGC-Mittal Energy Ltd has landed itself three oil blocks in Nigeria, progress on OMESL had been slow due to ONGC's new management losing interest in the venture.

While ONGC has not hidden its reservations on trading in oil and gas with Mittal, it has gone ahead and signed a deal with Hinduja Group for sourcing of LNG and is negotiating an OMEL type of agreement with the multi-billion dollar group.

Sources said Mittal will get 4.5 million tons per annum of LNG from the OK-LNG venture and is looking at taking stake in big oil and gas projects in Africa and Central Asia.

Industry pundits predicted that while OMEL may continue operations with its current portfolio of three blocks in Nigeria, OMESL may be wound up soon. Mittal wants to use his influence in oil-rich Central Asian and African countries, where he has operations, to get lucrative oil contracts.

OMEL had identified Kazakhstan, Turkmenistan, Azerbaijan, Uzbekistan, Congo, Angola, Trinidad and Tobago, Romania and Indonesia as priority areas for doing business.

Now, Mittal Steel, which does not have expertise in oil and gas business, will team up with Total to scout for opportunities in these countries, sources said, adding the two may not float a joint venture company but will look at participation on case-by-case basis.

ONGC had identified seven countries - Iran, Qatar, UAE, Kuwait, Libya, Oman and Saudi Arabia - for doing business with Hinduja Group.

Mittal had in August written to the government protesting against reversing of several decision reached with ONGC last year. ONGC has refused to lend its employees to OMEL or OMESL and turned down a proposal to open an office in New Delhi.

As a follow-up to the July 23, 2005 MoU, ONGC Videsh Ltd, the overseas arm of ONGC, and Mittal Investment, the investment holding arm of Mittal Steel, in October 2005 signed definitive agreement to form OMEL.

ONGC and Mittal Investment joined hands to form OMESL for cooperation in trading and shipping of oil and gas.

OVL (in place of OMEL) and ONGC (in case of OMESL) were to hold 49.98 per cent equity and Mittal Investment 48.02 per cent. The balance 2 per cent was to be offered to SBI Caps.

Get Rediff News in your Inbox:
Ammar Zaidi in New Delhi
Source: PTI© Copyright 2024 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.
 

Moneywiz Live!