OVL on Wednesday said its USD 5 billion bid to buy a stake in Kazakhastan's biggest oilfield has been blocked by the central Asian nation.
New Delhi: Oil and Natural Gas Corp (ONGC) today confirmed that its USD 5 billion acquisition of a stake in Kazakhstan's biggest oilfield has been blocked by the Central Asian nation.
Kazakh exercised its pre-emption rights to block ONGC Videsh Ltd's deal to buy ConocoPhillips' 8.4 percent stake in the Kashagan oilfield.
The Kashagan deal was OVL's largest acquisition ever.
OVL, the overseas investment arm of state-owned ONGC, said it has received a communication from ConocoPhillips that Government of Kazakhstan has exercised "its priority right and pre-empted" its bid to acquire 8.4 percent stake.
According to Kazakh law, the government has the right to buy any oil asset for sale in the country at the price agreed on by buyer and seller.
Kazakhstan's national oil company KazMunaiGaz will buy the US oil company's 8.4 percent interest in the world's largest oil find in five decades for about USD 5 billion. This stake will then be sold to China National Petroleum Corp (CNPC) for a reported USD 5.3-5.4 billion.
"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 OVL to acquire the 8.4 percent stake of ConocoPhillips," OVL said in a statement.
OVL said it had in November last year finalised definitive agreements for acquisition of ConocoPhillips' stake in the oilfield.
"The bid of OVL was not pre-empted by the co-venturers (in the oil project) within in the stipulated time period that ended in January 2013," the statement said.
Exxon Mobil, Royal Dutch Shell, Italy's Eni, Total of France and KazMunaiGaz each hold 16.8 percent of Kashagan. Japan's Inpex Corp has 7.56 percent.
The Kashagan field, located in the shallow waters (about 5-8 meters) of the Kazakh North Caspian Sea, is the world's largest current development project.
The field, which is set to produce 370,000 barrels of oil a day, is to start output by September, eight years later than initially planned and with costs nearing USD 48 billion, double the early estimates.
India has lost at least USD 12.5 billion of deals to China in past years.