News: Mittal to buy half of Lukoil firm

(DNA 13/12/2006) Mumbai - Steel baron Lakshmi Mittal will pay Russia’s Lukoil $980 million (about Rs 4,400 crore) to buy 50% stake in a Kazakhstan oil firm.

His company Mittal Investment will undertake the deal though it is likely that it may rope in ONGC-Mittal Energy Ltd, a joint venture with ONGC Videsh at a later stage.

The deal with Mittal Investments that is expected to be in place in next few months has a debt component of $160 million.

The news was doing the rounds even as OVL chairman R S Sharma said they were willing to divest stake in Nigerian fields to Shell.

“We are talking to Shell because they have evinced interest in participating in the Nigerian blocks and their team was here,” Sharma said.

OMEL may give Total SA of France 18% stake in Block 279 and 26% in Block 285 in Nigeria. Shell may get 10-15%.

ONGC Mittal Energy, a joint venture of OVL and steel baron Laxmi Niwas Mittal, has three blocks in Nigeria. The company was earlier this year awarded OPL-246 which was auctioned by government after revoking licence of Nigeria’s South Atlantic Petroleum (Sapetro). It won the block by bidding $100 million, beating INC Natural Resources and BG-Sahara. The company has already got two blocks - OPL-209 near ExxonMobil’s Erha project and OPL-285.

Both ONGC and Mittal Investment Sarl dismissed speculation of their joint venture OMEL being in trouble with differences between the two partners. In a joint clarification, the companies said since OMEL’s incorporation, the company has successfully been awarded two prosperous blocks in Nigeria - OPL-279 and OPL-285. “The production sharing contracts for the two are expected to be signed shortly. OMEL is also in the process of being awarded another prosperous exploration block in Nigeria,” said the statement.

OVL’s subsidiary, ONGC Nile Ganga B.V. had acquired interest in a producing property in Syria along with China National Petroleum Corporation, a part of which is held by OMEL.

OMEL is also in an advanced stage of signing a farm-out agreement in respect of an exploration block in Turkmenistan. OMEL has also recently bid for an offshore block in Trinidad & Tobago. In addition, OMEL is looking for various opportunities including in Kazakhstan, Turkmenistan, Azerbaijan, Indonesia, which are at different stages of progression.