ONGC
According to persons familiar with the case, India’s flagship offshore oil business ONGC Videsh has found a new partner in Oil India Ltd to replace a reluctant IndianOil (IOC) for the probable acquisition of a 50% stake in Tullow Oil Plc’s USD 3.4 billion oilfield project in Kenya.
However, the OVL-OIL partnership is now under competition from the super-aggressive Chinese energy behemoth Sinopec, which has entered the battle to take advantage of the Indian government’s delay in finishing the transaction.
ONGC Videsh, the overseas arm of the state-owned Oil and Natural Gas Corporation (ONGC), was initially interested in purchasing half of the shares in the Lokichar oilfield in Kenya held by Tullow, Africa Oil Corp, and TotalEnergies SE.
Finalised deal
According to sources, the OVL board of directors accepted the deal, but the company intended to bring on board IOC, which had also expressed interest in the project.
OVL-IOC negotiated the project stake for months. However, the acquisition was unable to be finalised because IOC began to have second thoughts, probably due to financial pressures caused by fuel sales losses.
Oil India enters
According to sources, when a Kenyan ministerial team attended the India Energy Week in Bengaluru in February, the Indian side informed them that IOC will not be participating and that state-owned Oil India Ltd (OIL) would instead.
However, the Chinese saw an opportunity as a result of the months of delays. According to the company, China Petroleum & Chemical Corporation (Sinopec) is now sending fillers to Tullow and the other two project partners.
Deal at present
However, Chinese involvement may spoil the party because Beijing wields significant power in the African country. The OVL-OIL transaction would have made the Indian state-backed enterprises joint venture operators. Tullow is the current operator of the venture, owning 50% of it. Africa Oil Corp. and TotalEnergies SE each own 25% of the company.
The three were giving the Indians half of their investment. The company will be led by OVL, an explorer with interests in 35 oil and gas properties in 15 countries, and backed by OIL, the country’s second-largest state oil explorer.
Road to Investment in India
Barmer crude oil is also transported over a 700-kilometre heated pipeline from the Barmer deserts to the Gujarat coast. According to reports, Indian refiners on the west coast will be excellent buyers of Kenyan crude, but it will take three years for the companies to start producing oil from the moment the investment decision is made.
The USD 3.4 billion initiative comprises developing the South Lokichar oilfield and connecting them to Kenya’s Indian Ocean port of Lamu via a heated pipeline.
