OVL to buy ConocoPhillips’ Kashagan stake for $5 bn

In its biggest acquisition ever, Oil & Natural Gas Corp (ONGC) today agreed to buy US energy giant ConocoPhillips' 8.4 per cent stake in the Kashagan oilfield in Kazakhstan for about $5 billion.

ONGC Videsh Ltd, the overseas arm of the state explorer, will pay a base price of $4.25 billion plus a share of working capital and other cash calls together with interest for the 8.4 per cent stake in the field that produces 3,70,000 barrels per day (18.5 million tonnes a year) of crude oil.

This will be the biggest acquisition by OVL, surpassing its $2.2 billion buyout of Russia-focused Imperial Energy in January 2009.It will be the biggest acquisition by an Indian company this year, and the sixth largest in the history.

India last year spent $140 billion on import of crude oil. "The acquisition, subject to relevant government, regulatory approvals, priority rights and consortium pre-emption rights, is expected to close in the first half of 2013," OVL said. Italy's Eni, Royal Dutch Shell, France's Total, ExxonMobil and KazMunayGas have 16.81 per cent stake each, while Inpex of Japan has the remaining 7.56 per cent.

OVL is expected to add average annual production of about 1 million metric tonnes (MMT) for a period of over 25 years with peak production of about 1.6 MMT during the Phase 1 of the project. When Phase 2 and 3 are implemented, OVL's share will be hiked significantly.

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