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NEW DELHI : A consortium of state-run ONGC Videsh Ltd (OVL) and Indian Oil Corp. Ltd (IOCL) is in talks with Tullow Oil Plc to jointly acquire around 50% participating interest in the latter’s $3.4 billion oil project in Kenya, two people aware of the development said. Executives of all three companies met in Nairobi in July to discuss the plan, the people said on condition of anonymity.

Tullow Oil, an independent energy firm based in London but operating in Africa and South America, is planning to induct a strategic partner for its Project Oil Kenya. Tullow Oil’s proposed merger with Capricorn Energy Plc was recently shelved, with Capricorn choosing a combination with NewMed Energy Ltd Partnership.

Tullow is listed on London, Irish and Ghana stock exchanges and has 30 exploration and production licences across 11 countries.

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“Tullow Oil Plc’s Kenyan oil project is an interesting opportunity that the Indian state-run consortium is actively pursuing. Diversifying energy supplies and securing equity energy is an important focus area for the Indian government," said one of the two people cited above, requesting anonymity.

With India dependent on imports for as much as 85% of its oil needs and 55% of its natural gas demand, the government has stepped up efforts to acquire equity energy at a time energy prices have become very unpredictable.

OVL is the overseas arm of Oil and Natural Gas Corp. Ltd (ONGC) and has been investing in oil and gas assets. OVL owns a participating interest in 33 oil and gas assets in 15 countries and has produced around 9.4% of oil and natural gas of India’s domestic production in FY22.

An OVL spokesperson, in an emailed response, said, “As per company policy, we do not respond to market speculations." Queries emailed to the spokespersons of Tullow Oil, and Indian Oil Corp. remained unanswered till press time.

A sharp output cut by the Organization of the Petroleum Exporting Countries (Opec) amid record high prices of fuels in India has raised concerns among Indian policy planners, with the world’s third-largest oil consumer, particularly at a disadvantage; as any increase in global prices can affect the country’s import bill, stoke inflation and widen its trade deficit.

“In December 2021, as per the licence extension obligations provided by the government of Kenya in September 2020, the Project Oil Kenya JV Partners submitted a field development plan for the 10BB and 13T licences, including the additional exploration and appraisal (E&A) opportunities within the 10BB and 13T licences. The E&A plan for 10BA was also submitted," according to the information available on Tullow Oil website.

India’s energy security efforts have been gaining traction. A case in point is OVL looking to invest around $1 billion in a Brazilian offshore hydrocarbon block with Brazil’s state-run Petroleo Brasileiro SA (Petrobras) as the operator and raise its stake in the block, as reported by Mint earlier. India has been trying to diversify its energy supplies and access equity oil, with Indian Oil Corp. recently signing separate long-term contracts to procure crude oil from Colombia’s state-run Ecopetrol SA and Petrobras, respectively. Also, India is in talks with Angola and Algeria to procure liquefied natural gas (LNG) on long-term contracts.

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ABOUT THE AUTHOR
Utpal Bhaskar
"Utpal Bhaskar leads Mint's policy and economy coverage. He is part of Mint’s launch team, which he joined as a staff writer in 2006. Widely cited by authors and think-tanks, he has reported extensively on the intersection of India’s policy, polity and corporate space.
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Updated: 11 Oct 2022, 10:38 AM IST
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