New Delhi: An Indian consortium has backed off joining a bidding war for Africa-focused gas explorer Cove Energy Plc, saying it had not yet submitted an offer and one consortium member adding it would only make a bid if it was on an agreed basis.
A consortium of Indian public-sector energy companies Oil and Natural Gas Corp and GAIL India had said last month it was considering joining the race for Cove, at the centre of a bidding war after approaches from Shell and Thai state oil firm PPT.
But Indian state-run companies such as Coal India, GAIL and ONGC have not been particularly successful in closing large overseas acquisitions in recent years and have shied away from bidding wars despite sitting on huge piles of cash.
“We have not yet submitted a bid,” said an official with one of the Indian state-run companies, declining to be named as he is not authorized to speak to the media.
GAIL India finance director P.K. Jain confirmed the consortium had not submitted a bid, but said it was still open to buying a stake through “bilateral” negotiations - indicating the state group would not join the bidding war for Cove.
“If anything has to happen now, it will be only through a bilateral agreement,” Jain told reporters. “We are open for any opportunities that come, but pricing is very important,” he said, referring to GAIL’s acquisition plans.
Cove’s main asset is an 8.5% stake in Mozambique’s Rovuma Offshore Area 1, where another operator Anadarko said recoverable reserves could top 30 trillion cubic feet of natural gas - equal to nearly half of Canada’s proved reserves.
India’s Videocon Industries and state-run Bharat Petroleum Corp each own a 10% stake in the Rovuma block.
Shell had hoped to make a pre-emptive move for Cove by offering 195 pence per share for the company earlier this month, a 70% premium to the share price before Cove put itself up for sale on 5 Jan.
But Thailand’s PTT beat that offer with a 220 pence bid, or $1.77 billion.
Cove shares were trading at 205 pence on Friday.
PTT is Asia’s No. 3 oil and gas group by market value but had been overshadowed as a buyer of overseas assets by Chinese state-backed oil and gas groups that have been aggressive bidders for fields in Africa and South America in recent years.
The bid battle over Cove reflects intense industry interest in East Africa, a previously little-explored area which is tipped to become a major natural gas producing region.
The Indian consortium’s interest mirrored efforts by Indian steel, power and coal companies to scout for overseas coal mines to satisfy demand from the fast-growing economy, but analysts were skeptical about the state companies joining an bidding war.
An Indian state consortium of five companies in January last year decided not to counter Rio Tinto’s $3.9 billion bid for Australian coal miner Riversdale, after hiring a consultant and spending weeks weighing bid options.
Cove said earlier this month it was seeking clarity from Mozambique on a possible levy related to its sale, raising the prospect of a tax battle and potential delay to the $1.8 billion deal.