Kazakh oil project partners approve ONGC's acquisition of ConocoPhillips' stake

Kazakhstan's Kashagan oilfield partners have given their approval for Oil & Natural Gas Corp (ONGC) to acquire US energy giant ConocoPhillips' stake in one of the largest but most complex hydrocarbon developments currently being undertaken anywhere in the world.

In November 2012, ONGC's overseas arm ONGC Videsh Ltd (OVL) agreed to buy ConocoPhillips' 8.4-per cent stake in the Kashagan oilfield for approximately $5 billion, (See: ONGC acquires ConocoPhillips' Kazakh oilfield stake for $5 bn) its largest ever overseas acquisition after it paid around $2.1 billion in 2009 for acquiring Siberia-focused  Imperial Energy Corp Plc.

The partners of Kashagan project are seven global oil and gas giants that include Italy's Eni SpA, France's Total SA, Royal Dutch Shell Plc, US' ExxonMobil Inc, and Kazakhstan's KazMunaiGaz each holding 16.8-per cent stake, with the remaining 7.6 per cent held by Japan's Inpex Corp.

The consortium partners, which had two months to exercise their pre-emption rights, have not done so, giving ONGC a green light to go ahead with the acquisition. The deal however is still subject to the approval of the governments of Kazakhstan and India.

The Kazakh government now has till end of July to decide on the deal, but may not raise objections after its national oil company Kazmunaigas had opted not to exercise its pre-emption right.

According to analysts, ConocoPhillips stake is worth around $3.5 billion without taking into account the development of the unsure second and third phases of the project. They say that  ONGC has paid a large part of Phase 2 valuations upfront, which is still at risk.