ONGC Videsh Ltd is out of the race to acquire an 8.4 per cent stake in the Kashagan oilfield in Kazakhstan, the world’s biggest oil discovery in half a century. According to a Reuters report, the Kazakhstan government will now buy the stake and is likely to invite China instead to develop it.
In November 2012, ONGC Videsh, the overseas arm of India’s public sector explorer, had signed an agreement with ConocoPhillips to buy its 8.4 per cent stake in the oilfield for nearly $5 billion. However, the Kazakhstan government has decided to use its right of first refusal and allow KazMunayGas (KMG), the Central Asian nation’s national oil company, to buy this stake.
“Based on the communication received through ConocoPhillips, the government of Kazakhstan has announced that in accordance with the Republic of Kazakhstan Law (ROK) on Subsurface and Subsurface Use, ROK has exercised its priority right and pre-empted the bid by ONGC Videsh to acquire the 8.4 per cent stake of ConocoPhillips in the North Caspian Sea Production Sharing Agreement,” the Indian explorer said in a statement.
It is understood that KMG shall be designated as the buyer, on behalf of the State, ONGC Videsh added.
The Reuters report quoted Lyazzat Kiinov, KMG’s Chief Executive Officer, as saying that the company will buy the stake on behalf of the State. He had added that Chinese state oil firm CNPC is set to buy into the project.
The Kashagan field, located in the shallow waters of the Kazakh North Caspian Sea, is currently the world’s largest development project. Kashagan’s consortium partners are Eni, Total, Shell, ExxonMobil and KMG, each with 16.81 per cent participating interest, while ConocoPhillips has participating interest of 8.4 per cent and Inpex has 7.56 per cent.