ONGC likely to get 30 to 40 pc interest in Kazakh oil field

New Delhi, Jan 12 (PTI) Oil and Natural Gas Corp (ONGC)
is likely to pick up 30 to 40 percent interest in Kazakhstan's
prospective Satpayev oil field in the Caspian Sea, an official
said Monday.

ONGC Videsh Ltd (OVL), the overseas arm of the state-run
explorer, will sign agreement during the visit of Kazakhstan
President Nursultan Nazarbayev, who will be the Chief Guest at
the Republic Day Parade this year in the national capital.

Petroleum Secretary R S Pandey and OVL Managing Director
R S Butola are in Astana to conclude the agreement, the
official said on the sidelines of the Petrotech 2009
conference here.

This comes after three years of tough negotiations,
during which Kazakhstan went back and forth several times on
its commitment to give ONGC a stake. It was not immediately
known if Kazakhstan has finally relented on giving a stake or
if OVL would sign only an exploration contract wherein the
Indian flagship would get a fixed fee for its efforts.

"We need to wait to see the outcome of talks in Astana,"
the official said.

Kazakhstan had initially identified Satpayev and Akhambet
blocks in the Caspian Sea for giving 50 percent stake in one
of them to OVL. Later, it reduced the stake on offer to 25
percent and conditioned the Indian flagship’s entry to it
teaming up with steel baron Lakshmi N Mittal.

OVL relented and in June 2007 made an attractive
commercial proposal to KazMunaiGas (KMG), but in subsequent
negotiations, the Kazakhstan’s state-run firm did not agree on
the percentage of stake OVL would get.

It also did not agree on operatorship to OVL during
exploratory and appraisal stage.

KMG would hold the remaining interest in the block, the
official said.

Industry sources separately said that the Kazakh
Parliament in 2008 had began discussing introduction of a new
tax code, and pending which a moratorium on all the ongoing
negotiations was declared.

The Kazakhstan government has decided not to sign any
Production Sharing Agreement (PSA), which entail companies
getting a stake in oil and gas fields, and only exploration
contracts would be signed.

In case of commercial discovery, the contractor will have
the first preference to sign PSA, they said, adding the new
tax code would mean all the negotiation on commercial terms
would be reviewed again after the code is adopted.

An exploration contract defeats the purpose of energy
security as India is using OVL to secure oil assets overseas
to cut its import dependence. PTI ANZ
AM