Mittal acquires Lukoil''s 50 per cent stake in Kazakh firm for $980 million

Mumbai: Steel tycoon Lakshmi N Mittal has acquired Russian oil firm Lukoil''s 50 per cent stake in a Kazakhstan oil firm for $980 million (around Rs4,000 crore), marking his first major deal in the oil sector.

Mittal Investments will also take over half of Caspian Investments Resources Ltd''s (CIR) outstanding debt, which is equivalent to about $175 million, Moscow-based Lukoil said in a statement.

CIR, the 100 per cent investment arm of Lukoil Overseas has now become a joint venture between Mittal Investments and Lukoil Overseas.

CIR has equity in five Kazakh oil fields - Alibekmola, Kozhasai, Northern Buzachi, Karakuduk and Arman - in the Aktyubinsk and Mangistau regions. The fields, which have proven reserves of some 270 million barrels, currently produces more than 40,000 barrels per day. The output will be stepped up in the coming years.

Mittal has formed a joint venture with the Oil and Natural Gas Company (ONGC) for undertaking exploration activities outside India and some officials in ONGC see the acquisition as violation of the pact unless Mittal transfers the stake to the joint venture firm, ONGC-Mittal Energy Ltd.

"Mittal had promised us that the stake will be transferred to OMEL once the transaction is complete. Let us see if he keeps the promise now that has happened," an ONGC executive said.

Mittal and ONGC had in July 2005 agreed to participate on an exclusive basis through OMEL in Angola, Azerbaijan, Congo Brazzaville, Democratic Republic of Congo, Indonesia, Kazakhstan, Romania, Trinidad and Tobago, Turkmenistan and Uzbekistan.

Kazakhstan is one of the 10 countries Mittal had originally identified for exclusive pursuit of hydrocarbon opportunities in joint venture with Oil and Natural Gas Corp (ONGC).