ONGC & Canadian oil sands

ONGC may seek acquisition of Canadian oil sands

Oil & Natural Gas Corp (ONGC), India's biggest energy explorer, is
seeking to buy oil sands assets in Canada, three people familiar with
the matter said.

ONGC is currently evaluating the finances of a Canadian field, the
people said, asking not to be identified because the discussions are
preliminary. The explorer is considering buying an asset that can
produce about 10,000 barrels a day of heavy oil, worth at least $ 1
billion (Rs 4,550 crore), two of the people said.

India, planning a sovereign wealth fund to help companies bid for
overseas energy assets, has asked state-run ONGC and Oil India Ltd
(OIL) to make at least one acquisition each in the year starting April
to meet demand in the world's second-fastest growing major economy.
Indian companies are competing for overseas energy resources with
China, which spent a record $32 billion last year buying oil, coal and
metals projects abroad.

"This fits into ONGC's go-global strategy," said Neil Beveridge, an
energy analyst at Sanford C Bernstein Ltd in Hong Kong. "There are
enormous reserves in Canada's oil sands and volumes are large and this
fits into the strategy to get oil to India." ONGC directed calls to
ONGC Videsh Ltd (OVL), its overseas unit. RS Butola, managing director
of ONGC Videsh, wasn't immediately available for comment.

ONGC shares have gained 38 per cent in the past year, compared with an
82 per cent increase in the benchmark Sensitive Index. The stock
declined 1.2 per cent to Rs 1,056.65 in Mumbai trading. Imperial,
Gulfsands ONGC had Rs 12,740 crore ($2.8 billion) of cash and
short-term investments and net debt of Rs 12,710croreasofMarch 2009,
according to data compiled by Bloomberg. The company will have the
capability to raise about $25 billion (Rs 1.13 lakh crore) in 10
years, Chairman and Managing Director RS Sharma said on March 15. New
Delhi-based ONGC bought Imperial Energy Pic for ?1.4 billion ($2.1
billion) last year in its biggest acquisition.

The explorer won the rights to develop the Carabobo 1 heavy oil field
in Venezuela in partnership with OIL and IndianOil(IIndia's Cabinet
approved $2.18 billion (Rs 9,920 crore) in spending by the Indian
companies in the project last week.

OIL and IndianOil have bid to buy Gulfsands Petroleum Pic, which has
assets in Syria, the Indian companies said on March 23. The two
companies offered 315 pence a share, Gulfsands said that day. The bid
values the UK explorer at about ?380 million.

Conoco, Suncor Conoco Phillips, the third-largest US oil company,
plans to shed its 9 per cent stake in oil-sands producer Syncrude
Canada Ltd as part of a plan to sell $10 billion (Rs 45,504 crore) of
assets in two years to cut debt, the company said in October.

Business Standard, New Delhi, 26 March 2010