The Hindu : Business : Imperial Energy buyout: no pre-condition for OVL

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Wednesday, Nov 26, 2008
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Imperial Energy buyout: no pre-condition for OVL

Special Correspondent

Russia hopes to build more nuclear reactors in India

OVL not to revise share buyout price
Concern over erratic crude prices

— PHOTO: R. V. MOORTHY

NO STRINGS ATTACHED: Union Petroleum and Natural Gas Minister Murli Deora (right) with Russian Energy Minister Sergey Shmatko (centre) and Deputy Minister of Oil, Gas Industry and Mineral Resources of Turkmenistan B. Nedirov at the India-CIS roundtable on hydrocarbons in New Delhi on Tuesday.

NEW DELHI: Russia on Tuesday said it was neither opposed to ONGC Videsh Ltd. (OVL), the overseas arm of Oil and Natural Gas Corporation, acquiring Imperial Energy Corp plc. nor would set any pre-condition for clearing the deal. Russia is also hoping to build more nuclear power reactors following Nuclear Suppliers Group’s (NSG) clearance to India.

“Our approach towards this important deal is very liberal. If the Indian company acquires Imperial Energy, we are not going to put forward any demand (regarding reciprocal stake in Indian oil PSUs),” Russian Energy Minister Sergey Shmatko said while speaking to journalists at the inaugural function of the two-day ‘India-CIS roundtable on hydrocarbons’ organised by the Union Ministry of Petroleum and Natural Gas and the Federation of Indian Chambers of Commerce and Industry (FICCI).

OVL was expecting that it might have to give 25-40 per cent stake to a Russian company in lieu of the regulatory approvals from the Russian Government for acquiring Imperial Energy which will cost about 1.4 billion pounds ($2.1 billion).

The process of acquisition has begun which would be completed before the scheduled date of June 2009. OVL has also decided not revise its 12.50 pounds a share buyout of Imperial Energy, which has assets in the Tomsk region of western Siberia, despite steep decline in international oil prices.

Though the company has the option to revise the bid, it was not doing so. OVL has valued Imperial’s oil and gas reserves at $2.5-3 a barrel, which was beneficial even at current oil prices, said a senior OVL official.

Referring to NSG’s approval to nuclear fuel and technology trade with India, Mr. Shmatko said it would open up opportunities to his country to set up more nuclear power reactors in India.

“We expect the inter-governmental agreement on construction of additional units at the Kudankulam site as well as other sites in India to be signed in the near future. Russia and India have excellent prospects of cooperation in the nuclear area,” he added.

Expressing concern over the sharp fluctuation in crude oil prices, Mr. Shmatko said Russia, a major crude oil producer, would coordinate its investments and policies with the Organisation of the Petroleum Exporting Countries as low international prices were hurting them. Hinting at cutting down production, the Russian Energy Minister blamed the freefall of crude oil prices to recession in major economies and speculation in the oil market.

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