New Delhi: The government has given Oil and Natural Gas Corp (ONGC) nod to partner billionaire Lakshmi N Mittal for buying out 25% stake in Kazakhstan’s prospective Satpayev oilfield in the Caspian Sea.
ONGC Mittal Energy Ltd, the joint venture of ONGC Videsh Ltd and Mittal Investment Sarl, plans to invest $400 million in the Satpayev oil field, official source said.
The Cabinet Committee on Economic Affairs last evening gave OVL, the overseas arm of the state-run explorer, approval to invest its share of $204 million in the oilfield.
OMEL will pay $26 million as signing amount to the Kazakhstan government for 25% stake in Satpayev field. Besides, the partners will also pay $80 million as one-time assignment fee, they said.
Over and above these, the two have committed a minimum exploration investment of $165 million and an additional optional exploration expenditure of $235 million.
Satpayev is situated in highly prospective region of North Caspian Sea and in proximity to at least four fields. A peak output of 287,000 barrels per day is envisaged from the 256 million tons of reserves in the field.
Kazakh national oil firm KazMunaiGas will be the operator of the field, holding remaining 75% stake.
OVL, the overseas arm of state-run ONGC, and Mittal Investment Sarl are equal partners in OMEL.
The 1,582 sq km Satpayev block, situated in the Pre-Caspian Basin of Kazakhstan, holds 1.75 billion barrels of inplace oil reserves. It lies in proximity to major fields like Karazhanbas, Kalamkas, Kashagan and Donga, where significant quantum of oil has been discovered.
Kazakhstan had initially identified the Satpayev and Makhambet blocks in the Caspian Sea for giving 50% stake in one of them to OVL, the overseas arm of state-owned ONGC. Later, it reduced the stake on offer to 25% on condition that the Indian flagship company teamed up with steel baron Lakshmi N Mittal for entry.
OVL relented and in June 2007 made an attractive commercial proposal to KazMunaiGas, but in subsequent negotiations Kazakhstan’s state-run firm did not agree on the percentage of stake OVL would get. It also did not agree on giving operatorship to OVL during the exploratory and appraisal stages.
The two sides on 24 January signed Heads of Agreement but a contract is yet to be signed.
The Satpayev block, situated in the Pre-Caspian Basin of Kazakhstan in Caspian Sea, covers an area of 1,582 sq km and is at a water depth of 5-10 meters.
It is situated in a highly prospective region of North Caspian Sea and is in close proximity to major fields, like Karazhanbas, Kalamkas, Kashagan and Donga, where significant quantum of oil has been discovered.