NRI Mittal Strikes Ist Oil Deal

Steel magnate Lakshmi Mittal’s buyout of 50% in Lukoil’s stake in a Kazakhstan oil company for USD 980 million (Rs. 4000 crore) is a significant acquisition made by an NRI
investment abroad.

Lukoil is a Russian oil firm, and its subsidiary, Caspian Investment
Resources (CIR) is now a 50-50% joint venture of Lukoil Overseas
and Mittal Investments. Future investments by CIR include a 25%
share in Zhambay Llp, a company drilling for potential reserves
in the Caspian Sea.

Mittal would also be taking on half the outstanding
debts of Caspian Investment Resources which total up to USD 175
million
CIR has stakes in five Kazakh oil fields — Alibekmola, Kozhasai,
Northern Buzachi, Karakuduk and Arman in the Aktyubinsk and Mangistau
regions.

The fields are currently producing more than 40,000
barrels per day from total proven reserves of 270 million barrels,
and are expected to increase output in the next few years.

However, there is some concern voiced by the Oil and Natural
Gas Commission on this acquisition, as Mittal had committed to
transfer the stocks to the joint venture company OMEL formed
by Mittal Energy Ltd. and ONGC. Senior executives at ONGC are
hoping that Mittal would honour the agreement this time.

In the
recent past, Mittal has shot past ONGC in garnering a 49% stake
in Hindustan Petroleum’s USD 3 billion refinery in Bhatinda and a 3% stake in the USD 6 billion Chevron-operated Olokola LNG (OK-LNG) project in Nigeria

OMEL in 2005 had agreed to jointly explore the crude oil reserves
in Angola, Azerbaijan, Congo Brazzaville, Democratic Republic
of Congo, Indonesia, Kazakhstan, Romania, Trinidad and Tobago,
Turkmenistan and Uzbekistan.