India's ONGC has lost the giant Kashagan oilfield to the Chinese after Kazakhstan blocked its $5 billion deal to buy US energy major ConocoPhillips' stake in the Caspian Sea oilfield.
In its biggest acquisition till date, OVL, the overseas arm of Oil & Natural Gas Corp in November agreed to pay US energy giant ConocoPhillips about $5 billion for the 8.4 per cent stake in Kashagan, the biggest oilfield discovery in over four decades.
Italy's Eni welcomed the Indian company. The other four partners have 60 days from date agreement.
The Indian oil company has been struggling to generate positive free cash flows given its already high capital expenditure programme and projected rise in its fuel subsidy outgo.
Kashagan oil field is the world's most expensive energy project.
Faced with soaring demand, stagnant output at home and a need to diversify from Iranian crude imports lost to Western sanctions, Indian oil companies are hungry for deals like Oil and Natural Gas Corporation's ( ONGC's) Kashagan buy that promise supplies sooner rather than later.
While not all the oil bought overseas turns up in domestic refineries, it can give companies a stake in the global crude trade.
ONGC Videsh and ConocoPhillips said the transaction is expected to close in the first half of 2013.
Sources said ONGC Videsh Ltd, the overseas arm of state explorer, and GAIL have made a non-biding offer showing interest in acquiring Exxon's stake.
ONGC Videsh Ltd (OVL) on Wednesday said its $5 billion bid to buy a stake in Kazakhastan's biggest oilfield has been blocked by the central Asian nation.
A look at the deals in the past that made news, awed investors and probably gave management sleepless nights.
Some analysts have raised doubts on the wisdom of the recent deal. Though the Kashagan field has been under development for 12 years, involving an investment of almost $50 billion, the output isn't great. Even the earlier acquisition of Imperial Energy Corporation has not met the targets.
Oil & Natural Gas Corporation Ltd said its ONGC Videsh Ltd authorized plans to hold talks with British Gas for acquisition of their stake in Kashagan oil filed. However, no action has been taken in this regard, it said.
The Turkmenistan event underscores the lengths to which China's oil-and-gas companies will go to curry favour in resource-rich locales.
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