OVL submits bid for 20 per cent stake in Angolan oil block

ONGC Videsh Ltd, a wholly-owned subsidiary of Oil and Natural Gas Corporation, has put in a bid to buy stake in a discovered oil block in Angola, after a consortium of two Chinese companies has already reported to have bid $1.5 billion last month, confirmed a top official of OVL on condition of anonymity.

This would be the Indian flagship oil company's second big-ticket bid for oil assets in the last one month after it emerged as the preferred buyer of UK-based Imperial Energy for $2.88 billion.

The value of the bid cannot be ascertained, but it has to be higher than the $1.5 billion joint bid by China's Sinopec and Chinese National Offshore Oil Corporation. ONGC Chairman and Managing Director RS Sharma, who is also non-executive chairman of OVL, did not comment on the bid for the Angolan oil block.

He had, however, told Business Standard earlier that OVL would continue to look for overseas oil and gas assets even after the Imperial Energy acquisition.

Meanwhile, OVL has also formally sought regulatory approvals from the Russian government for acquiring Imperial Energy, which has its oil assets in Russia and Kazakhstan, the London Stock Exchange-listed Imperial informed the exchange.

Petroleum Minister Murli Deora had said last week the deal was likely to be sealed in the next four to five weeks.

OVL has bid for a 20 per stake in the Angolan Block 32, which is owned by a consortium of firms led by French firm Total Exploration and Production Angola.

However, it is US-based Marathon Oil that is selling 20 per cent in the block. After the sale, Marathon, the fifth largest oil exploration and refining company in the US with oil producing assets in Alaska, the Gulf of Mexico and the North Sea off Norway, will still own 10 per cent.

Marathon Oil did not respond to an e-mail query.

The Angolan Block 32 is very promising, said three top officials belonging to ONGC and OVL. Oil has been discovered in 12 wells in the block, Marathon said on its Web site.

Angola is the largest supplier of oil to China, which is the world's second largest crude oil importer.

The Angolan Block 32 is reported to have 1.5 billion barrels of oil reserves, the production of which is slated to start in 2012. At 1.5 billion barrels, the block is half a billion barrels more than Cairn India's estimated oil reserves in Rajasthan, which would contribute 20 per cent of India's oil production when it comes on stream.

OVL's managing director R S Butola said last week that the race for US-based Marathon Oil's 20 per cent stake in ultra-deepwater Block 32 in Angola was not yet over. He, however, did not mention if OVL had bid for the stake.

Apart from Total Exploration and Production Angola holding 30 per cent, Sonangol holds 20 per cent, Esso Exploration and Production Angola (a subsidiary of US-based ExxonMobil) holds 15 per cent and Angolan company Petrogal has 5 per cent interest in the block.

OVL's bid marks the new-found aggressiveness of the Indian company in buying oil assets overseas.

OVL and Chinese companies have been competing for oil assets across the world in order to feed their surging economies.

OVL has, however, largely lost out to the Chinese companies in the race.

It recently lost its bid to buy Canadian company Encana's assets in Ecuador when a Chinese consortium bid $1.42 billion.

It also lost PetroKazakhstan to China National Petroleum Company's $3.6 billion bid. In Angola too, OVL lost out on taking 50 per cent in BP-operated Block 18 when the African nation preferred China.

OVL, which has 38 oil and gas projects across 18 countries, produced 6.81 million tonnes of oil from assets in Sudan, Russia, Colombia, Syria and Vietnam in 2007-08. It does not always bring this oil to India, but exchanges the oil from its assets with oil from countries nearer to India.

OVL aims to produce 20 million tonnes of oil from its overseas assets by 2020.