BackOVL-ConocoPhillips deal to figure during Kazakh minister visit
OVL plans to buy ConocoPhillips’ 8.4% stake in Kazakhstan’s Kashagan oil field for about $5 bn
Premium(Kirill Kudryavtsev/AFP)
New Delhi: Energy security, including plans of state-run Oil and Natural Gas Corp. Ltd’s overseas arm to buy ConocoPhillips Co.’s 8.4% stake in Kazakhstan’s Kashagan oil field, and connectivity with the landlocked Central Asian state to boost trade are expected to be on the agenda of talks with visiting Kazakh foreign minister Erlan Idrissov this week, people close to the developments said on Sunday.
Idrissov is the first Kazakh foreign minister to visit India for bilateral talks in more than a decade. The last such visit took place in 1999, though Kazakh president Nursultan Nazarbayev was in India as the Republic Day parade chief guest in 2009 and Prime Minister Manmohan Singh visited Astana in April 2011.
Last year, India marked two decades of the establishment of diplomatic contact with the five Central Asian republics of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, formed after the breakup of the former Soviet Union. “India considers the region as part of its extended neighbourhood, so it is an important country for us," said one of the people cited above. The people spoke on condition of anonymity.
Kazakhstan, the largest among the Central Asian republics, is reported to have major deposits of petroleum, natural gas, coal, iron ore, copper, gold and uranium. India has already signed a civil nuclear cooperation pact with Kazakhstan—one of the three top producers of uranium alongside Australia and Canada—for the import of the fuel to feed its atomic power plants. The deal was clinched during Nazarbayev’s visit in 2009.
Talks between Idrissov and Indian foreign minister Salman Khurshid on Tuesday are expected to include ONGC Videsh Ltd’s (OVL) plans to buy ConocoPhillips Co.’s 8.4% stake in Kashagan oil field for about $5 billion. ONGC made the announcement that it would buy the US-based oil producer’s stake in November, adding that it was looking at closing the deal in the first half of 2013.
“The ball is now in the Kazakh government court," said a second person close to the developments. “The Kazakh government can either approve the deal (between OVL and ConocoPhillips) or buy up the shares on offer before the transfer happens," the second person said.
Energy-starved India is looking to augment its fuel sources to meet the requirements of its rapidly developing economy. India’s petroleum ministry estimates the country’s energy requirements to more than double by 2035 to around 1,500 million tonnes of oil equivalent (mtoe) from less than 700 mtoe at present.
The Kashagan field—estimated to be the world’s largest hydrocarbon development project valued at around $187 billion—is jointly controlled by Kazakhstan’s state-run KazMunaiGas and six international companies—ConocoPhillips, Italy’s Eni SpA, Exxon Mobil Corp., Inpex Corp. of Japan, Royal Dutch Shell plc, and France’s Total SA. Kashagan holds an estimated 30 billion barrels of oil-in-place, of which 8-12 billion is potentially recoverable.
ONGC Videsh holds a 25% share in the Satpayev block in Kazakhstan.
Another issue on the agenda is expected to be exploration of ways to increase connectivity to improve trade, the second person cited above said. Bilateral trade in the period between India and Kazakhstan in 2011-2012 was about $500 million, according to the ministry of external affairs website. Last year, India had said it would allow each of the landlocked Central Asian states to operate 14 flights a week to India with the Indian government looking at increasing flights by its carriers too, the second person cited above said.
Discussions with Khurshid are also expected to cover the development of the North-South Corridor to Central Asia through Iran. The route connects Mumbai in India, Bandar Abbas port in Iran and another port known as Bandar Anzali in northern Iran on the Caspian Sea coast. From there, goods are expected to be transported to Astrakhan in Russia and on to Central Asia. The Indian government says this route is shorter than the current one through the Suez Canal and the Mediterranean Sea. While the Suez Canal route takes 45-60 days, the North-South Corridor will take 25-30 days.
From India’s point of view, the North-South Corridor will help India bypass arch rival Pakistan that denies India a landroute through Afghanistan to Central Asia. The original International North-South Transport Corridor Agreement was initiated in 2000 by India, Iran and Russia. Later, 10 more countries in the region signed on to the project that promises to cut the costs involved in transporting goods to Central Asia by 30%, the Indian commerce ministry website says.
Talks between Iran and the international community on the former’s contentious nuclear programme could also figure in the Khurshid-Idrissov meet given that Kazakhstan hosted the latest round last week that was reportedly “constructive," according to Reuters.
Reuters contributed to this story
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