ONGC Videsh Ltd. (OVL), on Monday, announced that it had finalised agreements for the acquisition of 8.40 per cent participating interest (PI) of ConocoPhillips in the North Caspian Sea Production Sharing Agreement (NCSPSA), which included the Kashagan field in Kazakhstan.

The acquisition, subject to relevant government and regulatory approvals, priority rights and consortium pre-emption rights, is expected to close in the first-half of 2013, ONGC said in a statement here.

The Kashagan field, located in the shallow waters (5m to 8m) of the Kazakh North Caspian Sea, is the world's largest current development project. Kashagan’s consortium partners are: ENI, Total, Shell, ExxonMobil and KazMunaiGaz each with 16.81 per cent PI, while ConocoPhillips has 8.4 per cent PI and Inpex has 7.56 per cent.

The acquisition would mark OVL’s entry into the largest oil proven North Caspian Sea of Kazakhstan. From Phase-1, the acquisition is likely to add an average annual production of about one million metric tonne (mmt) for over 25 years with a peak of about 1.6 mmt . When Phase 2 and 3 are implemented, the OVL’s share will be significantly higher.

The acquisition also bears importance to India in terms of contributing towards the country’s energy security. ONGC has recently formulated its Perspective Plan - 2030, envisaging that oil and gas production of OVL would increase from the current level of 8.75 million metric tonnes of oil equivalent (mmtoe) in 2012-13 to 20 mmtoe by 2018-19 and 60 mmtoe by 2030-31.

ONGC Chairman and Managing Director Sudhir Vasudeva said the current transaction was a major step towards achieving this goal.

Deal size

PTI reports:

The value of the deal size is about $5 billion.

OVL 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 370,000 barrels a day (18.5 million tonnes a year) of crude oil.

This will be OVL’s biggest acquisition, surpassing its $2.2-billion buy-out 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.

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