Mittal may not transfer Kazakhstan assets to ONGC JV

New Delhi, Mar 04, 2008 (Asia Pulse Data Source via COMTEX) -- MT | news | PowerRating | PR Charts -- Lakshmi N Mittal's proposal to transfer the Kazakhstan oil fields, which he acquired from Russia's Lukoil, to his joint venture firm with state-run ONGC Videsh Ltd has hit a fresh hurdle with a new Kazakhstan energy law putting barriers for transfer of ownership.

"They (Kazakhstan) have announced that for every transfer (of oil and gas assets from one company to another) or change of ownership, they take half of the equity ownership... That is an issue," ArcelorMittal President and Chief Financial Officer Aditya Mittal told PTI here.

Mittal Investment Sarl, the holding company of Mittal family's interest in ArcelorMittal, had in April 2007 acquired Russian oil firm Lukoil's 50 per cent stake in Caspian Investments Resources for 980 million dollars.

The acquisition was originally to be done by ONGC Mittal Energy Ltd, the equal joint venture of OVL and Mittal Investment, but the India born billionaire went ahead on his own citing opposition to OMEL from Lukoil. He has since been delaying transferring the assets to OMEL citing opposition to such a move by the Kazakhstan government.

"We have to work (on such) regulatory issues and find solutions so that we achieve success," Mittal said.

Kazakhstan's new law stipulates its national oil firm KazMunaiGaz taking half of the ownership at every equity transfer, thereby nationalising most of the oil and gas field in the country over the next decade or more.

"We are working with them to effect the transfer," he said.

Mittal said Kazakhstan was in the midst of reworking its energy policy. The new law was aimed at getting back oil and gas assets that are now in private hands. CIR has equity in five Kazakh oil fields - Alibekmola, Kozhasai, Northern Buzachi, Karakuduk and Arman - in the Aktyubinsk and Mangistau regions. Current production from the fields, which have total proven reserves of some 270 million barrels, is more than 40,000 barrels per day and is set to increase in the coming years.

Kazakhstan is one of the 10 countries Mittal had originally identified for exclusive pursuit of hydrocarbon opportunities in joint venture with Oil and Natural Gas Corp (ONGC). The state run firm wanted to use Mittal's clout with the governments in Africa and Central Asia particularly Kazakhstan to bag oilfields.

Mittal and ONGC had in July 2005 agreed to participate on an exclusive basis through OMEL in Angola, Azerbaijan, Congo Brazzaville, Democratic Republic of Congo, Indonesia, Kazakhstan, Romania, Trinidad and Tobago, Turkmenistan and Uzbekistan.

Mittal Investment and Lukoil now hold 50 per cent stake each in Caspian Investment Resources Ltd. Lukoil had used Caspian Investments Resources Ltd to buy Kazakh oil producer Nelson Resources Ltd for 2 billion dollars in 2005.

Initially, OVL was also looking at acquisition of Nelson Resources.

More News:   Market Updates | Stock Alerts | All Trading News | Stock Index