CNPC to trip ONGC in Kazakh race

Oil & Natural Gas Corporation (ONGC), the country’s biggest state-owned exploration and production company, may once again lose the race for a stake in an international oil company to a Chinese counterpart.

Recently, ONGC expressed interest in buying 48% in Kazakhstan-based oil company MangistauMunaiGas (MMG). The Kazakh government owned oil major KazMunaiGas holds the remaining 52%. Also interested in the minority stake in MMG are China’s biggest energy company China National Petroleum Corporation (CNPC) and Russian gas behemoth Gazprom Neft. International media reports suggest that the deal is tilting in the favour of CNPC, as China has reportedly offered the Kazakhstan government a multi-billion dollar economic package to help it overcome the current financial crisis.

An ONGC spokesperson admitted that the company is interested in MMG stake but refused to disclose further details as the deal hasn’t been finalised yet.

On April 6, news agency Bloomberg reported that Kazakhstan’s energy minister said the government is seeking Chinese investments of $10 billion and talks were underway with China’s biggest oil company for a stake in a local crude producer.

If CNPC bags the deal, it won’t be the first time that ONGC has faced defeat from Chinese companies in its bid for international firms. However, one of its major victories was the acquisition of London-based Imperial Energy.

ONGC owns a 20% stake in Russia’s Sakhalin I project, but is keen on buying more assets in the former Soviet Union. This kicked off a battle between Indian and Chinese oil and gas exploration firms as both are interested in the former Soviet Union to address their energy security needs. In most cases, however, Indian companies were outbid by their Chinese counterparts.

ONGC Videsh Ltd, the international arm of ONGC, and Sinopec came together in September 2006 to buy a Colombian oil asset — Omimex de Colombia. In January 2006, CNOOC Ltd, another Chinese oil giant, beat ONGC Videsh to a 45% stake in the huge Akpo oilfield off Nigeria and in 2005, a Chinese firm outbid the ONGC arm in the race for PetroKazakhstan and Ecuador.

MMG currently owns 36 oil and gas fields, of which 15 are being developed. The company’s largest fields are Kalamkas and Zhetybai. It also owns 58% in the Pavlodar petrochemical plant. MMG has estimated crude oil reserves of 180 million tonne (1.32 billion barrels) and also operates a chain of retail stations under the brand Helyos.