Oil and Natural Gas Corporation Ltd and LN Mittal-promoted Mittal Investments Sarl on Saturday signed a memorandum of understanding to form two Cyprus-based joint venture companies -- ONGC Mittal Energy Ltd and ONGC Mittal Energy Services Ltd.
While the financial institutions will hold 2 per cent stake in both the joint ventures, the remaining 98 per cent equity will be divided between the Indian and the foreign company in the ratio of 51:49. The deal with the financial institutions will be signed within the next thirty days.
ONGC Videsh Ltd will hold 49.98 per cent, financial institutions 2 per cent and the Mittals 48.02 per cent in ONGC Mittal Energy Ltd. The equity structure for the second JV--ONGC Mittal Energy Services Ltd--will be the same, with ONGC holding the majority stake, said ONGC Chairman Subir Raha.
Indonesia, Kazakhstan, Azerbaijan, Nigeria, Trinidad and Tobago, Malaysia are the likely countries where the Mittal company will expand ONGC's reach through the partnership, said LN Mittal.
While ONGC Mittal Energy Ltd will focus primarily on acquiring oil equity and gas abroad, the second JV, ONGC Mittal Energy Services Ltd, will look into trading, shipping and other activities arising from the OVL-Mittal tie up.
"This is a deal where technical expertise comes from ONGC and global business experience comes from Mittal Steel," added Raha.
Union Minister for Petroleum and Natural Gas, Mani Shankar Aiyar on this occasion said, "The partnership between OVL and Mittal Steel company would not only double but exponentially increase our strength."
He said through these JVs oil and gas assets could be acquired profitably overseas and would optimise oil and gas availability domestically.
