ONGC to buy Kazakh oilfield stake for $5 billion

In its biggest acquisition ever, state-owned Oil & Natural Gas Corp (ONGC) on Monday agreed to buy US energy giant ConocoPhillips' 8.4 per cent stake in the Kashagan oilfield in Kazakhstan for about $5 billion.

ONGC Videsh Ltd, the overseas arm of the state explorer, will pay a base price of $4.25 billion plus a share of working capital and other cash calls together with interest for the 8.4 per cent stake in the field that produces 370,000 barrels per day (18.5 million tons a year) of crude oil.

This will be the biggest acquisition by OVL, surpassing its $2.2 billion buyout of Russia-focused Imperial Energy in January 2009.

It will be the biggest acquisition by an Indian company this year and the sixth largest in the history.

OVL is seeking oil and gas properties overseas to meet the nation's rising energy needs. India last year spent $140 billion on import of crude oil.

The stake buy in Kashagan field is subject to approval of governments of Kazakhstan and India and also to other partners in the Caspian Sea field waiving their pre-emption rights.

Italy's Eni, Royal Dutch Shell, France's Total, ExxonMobil and KazMunayGas have 16.81 per cent stake each, while Inpex of Japan has the remaining 7.56 per cent.

Industry sources said ExxonMobil and Shell are seeking bigger stakes in the Kashagan oil field and operating control before starting to expand the project.