ONGC-Mittal JV bags block in Trinidad

The combine had earlier won two blocks in Nigeria

Steel baron Lakshmi N Mittal’s joint venture with ONGC Videsh (OVL) has won an exploration block with estimated gas reserves of two trillion cubic feet (tcf) in Trinidad and Tobago.

ONGC-Mittal Energy beat UK’s Centrica to bag the offshore block, a company official said.

OMEL, the 51:49 joint venture between Mittal Energy and the overseas investment arm of state-run Oil and Natural Gas Corp (ONGC), made a revised financial commitment of about $204 million to win the block.

In January 2006, Trinidad and Tobago offered eight onshore and three shallow marine blocks for bidding. OMEL made an initial bid of about $175 million, including signature bonus. It later emerged that Centrica and a consortium led by BG of the UK had also submitted bids for the block.

“OMEL was informed that there was a tie in the bids of OMEL and Centrica, and OMEL was asked to submit a revised bid,” the official said.

The bid parameters were reviewed by OVL and OMEL in consultation with technical advisors and a revised bid for the block with increase in the minimum financial exposure to OMEL from about $175 million to about $204 million was submitted.

The Trinidad and Tobago government has informed that OMEL’s revised bid had been successful and it had invited the company to negotiate the production sharing contract for the block.

The official said though it was earlier decided that a part of the equity would be shared with other Indian companies considering the level of investment and risk involved, OMEL decided not to farm-out any equity at this stage.

“OMEL will hold 100 per cent participating interest in the block.”

This is OMEL’s second biggest success after Nigeria where it had acquired two exploration blocks.

Mittal had inked a joint venture agreement with ONGC Videsh in July 2005 for acquisition of oil and gas fields, refinery business and LNG projects in 27 countries.

The July 2005 agreement had classified target countries into Schedule-I and II. Mittal and ONGC had agreed to participate on an exclusive basis through OMEL in Schedule-I countries such as Angola, Azerbaijan, Indonesia, Kazakhstan, Romania, Trinidad and Tobago, Turkmenistan and Uzbekistan.

In Schedule-II, the partners agreed to bid jointly on a case-to-case basis in Bosnia, Canada, China, Czech Republic, France, Germany, Kyrgyzstan, Liberia, Sudan, Macedonia, Mexico, Nigeria, Poland, South Africa, the UK and the US.

“OMEL is looking for various opportunities in Kazakhstan, Turkeministan, Azerbaijan, Indonesia, which are at different stages of progress,” the official said.

Since incorporation, OMEL has been awarded two prosperous blocks in Nigeria – OPL-279 and OPL-285, the production sharing contracts of which are expected to be signed shortly.

OMEL is also in the process of being awarded another exploration block in Nigeria (OPL-246).

OVL’s subsidiary, ONGC Nile Ganga BV acquired interest in a producing property in Syria along with China National Petroleum Corp, a part of which is held by OMEL. OMEL also recently bagged a block in Turkmenistan.