New Delhi: India on Tuesday sought support from the Kazakhstan government for plans by state-run Oil and Natural Gas Corp. Ltd’s (ONGC’s) overseas arm to buy ConocoPhillips Co.’s 8.4% stake in the Kashagan oilfield.
Visiting Kazakh minister Erlan Idrissov, however, appeared non-committal saying he expected a decision “sooner than later”.
In his statement to reporters after talks with Idrissov, the first Kazakh foreign minister to come to India on a bilateral visit since 1999, India’s external affairs minister Salman Khurshid said the two reviewed bilateral ties spanning defence, civil nuclear energy and hydrocarbons.
“We reviewed our growing cooperation in the energy sector. Our company ONGC Videsh Ltd (OVL) has already acquired a 25% stake in the Satpayev Oil Block in the Caspian Sea, based on agreements that were reached when our Prime Minister (Manmohan Singh) visited Kazakhstan (in 2009).
“We also explored further possibilities of cooperation in the hydrocarbon sector. We requested the support of the government of Kazakhstan for an important bid that OVL is making for a stake in the Kashagan oil field,” Khurshid said.
It was in November that ONGC made the announcement that it would buy the US-based oil producer’s stake. ONGC added it was looking at closing the deal in the first half of 2013.
Idrissov, in response, advocated a “broad rather than narrow” vision for cooperation in the oil and gas sector.
“I hope this (OVL-ConocoPhillips deal) will be done soon. This is a very complex project and it involves work of partners in the consortium changing hands... It involves a lot of technical, financial issues and therefore everyone is keen that the decision is taken in a well informed, well balanced way,” he said.
“We of course are aware of the proposal made by ONGC... I hope a decision will be done sooner than later. But let me stress that Kashagan is not the end of life. We have a very successful example of cooperation in the same Caspian Sea area but on a bilateral basis,” he said—a reference to ONGC Videsh picking up a 25% share in the Satpayev block in Kazakhstan in 2011.
A person aware of developments said Idrissov told Khurshid during the talks that the Kazakh government would have to take a view on the OVL-ConocoPhillip stake sale. The Kazakh government can either buy the shares on offer or approve the stake sale.
The Kashagan field—estimated to be the world’s largest hydrocarbon development project valued at around $187 billion—is jointly controlled by Kazakhstan’s state-run KazMunaiGas and six international companies—ConocoPhillips, Italy’s Eni SpA, Exxon Mobil Corp., Inpex Corp. of Japan, Royal Dutch Shell plc., and France’s Total SA. Kashagan holds an estimated 30 billion barrels of oil-in-place, of which 8-12 billion is potentially recoverable.
Energy-starved India is looking to augment its fuel sources to meet the requirements of its growing economy. India’s petroleum ministry estimates the country’s energy requirements to more than double by 2035 to around 1,500 million tonnes of oil equivalent (mtoe) from less than 700 mtoe at present.
Among other proposals discussed were ways to increase investment and a possible energy and trade corridor connecting India and Kazakhstan.
“Our trade is reported to have crossed the half billion dollar mark for the first time last year. We also have a number of significant investment projects in the pipeline, in both countries. We agreed to explore possibilities of creating direct trade and energy corridors between our countries. We hope to also have enhanced air connectivity with airlines from Kazakhstan and India soon having upto 14 flights a week to destinations in each of our countries,” Khurshid said.
Talking about regional cooperation, Idrissov said “no issue in this part of the world can be resolved without India” adding one of the key areas of cooperation was Afghanistan. Both countries are worried about the spillover of the hardline Sunni Taliban’s influence beyond the borders of the country from where US-led international troops have announced their withdrawal by next year.