The biggest oil explorer of India, ONGC or Oil and Natural Gas Corporation, is all set to buy the Kashagan oilfield of Conoco as reports recently unveiled. The deal between ONGC and Conoco for its 8.4 percent stake of the Kashagan project of Kazakhstan has been settled for somewhere around $5 billion or £3.1billion.
ONGC, the biggest oil explorer of India, is looking for a makeup of their flagging production by completing this deal with ConocoPhillips. This deal between ONGC and Conoco will definitely fuel the growing economy of India by remarkably increasing their production. Various experts are still of the opinion that delays in addition to the increasing costs in Central Asia in this field could cause some problems in the completion of the deal between ONGC and Conoco.
The present scenario:
The Kashagan oilfield of Conoco is the biggest project since the time of its discovery in the year 1968. The oilfield is known to hold an estimate of approximately 30 billion oil barrels in one single place, out of which potentially 8 to 12 billion barrels are extractable. The first expected production from the Kashagan oilfield of Conoco is to come sometime around the year 2013. It is located at the bottom of the Caspian Sea. For the sub-continent of India, the situation is such that it has to import almost 80 percent of its oil needs as its capacity of refining has far outgrown its local oil output capacity. Hindustan presently stands as the fourth biggest importer of oil in the world and a major reason for this is that the oil production from the state and the biggest oil explorer of India, ONGC has almost become stagnant for some years. The total value of the assets of the Kashagan oilfield of Conoco was somewhere around $5.5 billion according to the rates of the 30th of September.
According to some of the analysts, the deal between ONGC and Conoco was quite good for the Texas-based company ConocoPhillips, as price paid is supposedly higher than the expectations. The expectations reached somewhere around $4 to $5 billion and hence the price that is being paid by the biggest oil explorer of India for the Kashagan oilfield of Conoco is towards the higher end of the expectations. This deal between ConocoPhillips and the biggest oil explorer of India still awaits the approval of the government and is also dependent on the other participants of the Kashagan oil field. These participants have their rights to their end of the stake as well. The Kashagan oil field is controlled by the KazMunai Gas that is run by the state apart from the other six international companies dealing with oil, just to mention Royal Dutch Shell and ExxonMobil. The deal between ONGC and Conoco is the largest outbound deal from the sub continent since Bharti Airtel, the operator for mobile phones, bought operation of as many as 15 countries of Africa in the year 2010 for as much as $9 billion.