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ONGC’s subsidiary to acquire ConocoPhillips’ 8.4% stake in Kashagan field

27 Nov 2012 Evaluate

Oil and Natural Gas Corporation’s (ONGC) - wholly owned subsidiary - ONGC Videsh (OVL) would be investing around $5 billion to acquire ConocoPhillips’ 8.4% stake in the Kashagan field off North Caspian Sea. The deal, which would be the largest acquisition by ONGC's overseas investment arm, is expected to be sealed by the first half of next calendar year.

The acquisition is likely to augment average annual production by about a million tonnes of oil in OVL's kitty for a period of over 25 years, with a peak of about 1.6 million tonnes. This would increase during the second and third phases of development.

Further, Kashagan is estimated to hold some 30 billion barrels of oil-in-place, of which 8-12 billion are potentially recoverable. The field is located in the shallow waters in depths of 5-8 metres in the Kazakh North Caspian Sea.

However, the Kashagan deal would see light of the day after the governments of both Kazakhstan and India approve the same, while some of the partners in the consortium operating the field give up their pre-emption right, also called right of first refusal.

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