Financial Times: ONGC mulls counter-bid for PetroKaz: “In Africa, ONGC has been bruised after being trumped by Chinese bids. ONGC was close to buying out Shell's half share in an Angolan field jointly owned with BP, but was pipped by a Chinese offer strengthened by a promise of large credit lines.”: Wednesday 24 August 2005
By Khozem Merchantin Mumbai
Published: August 24 2005
Oil and Natural Gas Corporation, the Indian energy company, was yesterday moving towards a decision on a counter-bid for Petro-Kazakhstan, the Canada-listed company acquired by China National Petroleum Corp in a contest that underlined the fierce race for energy security by the two Asian economic giants.
CNPC bid $4.18bn for PetroKaz, edging out a joint offer of $3.8bn from ONGC and the London-based Mittal family headed by billionaire Lakshmi Mittal. The Mittals own 88 per cent of Mittal Steel, the world's largest manufacturer of the metal.
"All options are open," said Subir Raha, chairman of ONGC yesterday, after its apparent defeat. It believed the company was within its grasp, thanks largely to the partnership with Mr Mittal.
Mittal Steel acquired and turned round the Karmet steel plant in Kazakhstan, building up a network of local contacts that ONGC believed could be a decisive lever as it sought energy in new markets.
But, after being outbid by CNPC, China's largest oil producer, energy analysts doubted whether ONGC had the appetite for a bidding war for PetroKaz.
"This is another setback at the hands of the Chinese and ONGC will have to move on," said Madhu Nainan,editor of PetroWatch in Mumbai.
ONGC executives insisted, however, that their pact with Mr Mittal was "long term" and that they were looking at targets in "a long list of countries," notably Latin America and Africa.
In Africa, ONGC has been bruised after being trumped by Chinese bids. ONGC was close to buying out Shell's half share in an Angolan field jointly owned with BP, but was pipped by a Chinese offer strengthened by a promise of large credit lines.
In Sudan, where it owns large acreages, some jointly with Chinese companies, ONGC was also thwarted by Chinese rivals.
The setback in Kazakhstan may now encourage ONGC to seek "joint strategic bids" with Chinese companies.
In an interview with the FT earlier this year, Mr Raha said: "My biggest hope for the year ahead is more strategic co-accommodation with China's energy companies. We are both huge consumers chasing the same assets and the only beneficiaries are the sellers." He said contacts had been made with Chinese counterparts and "the next few months will see a strengthening of this trend".
ONGC and other Indian fuel resources companies such as Gas Authority of India are leading an aggressive hunt for energy assets overseas to meet strong demand for fuels from India's fast growingeconomy.
India imports 70 per cent of its oil, about four-fifths of which is from the unstable Middle East.
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