The Hindu Business Line : ONGC-Mittal overseas trading venture benched

New Delhi, March 31 ONGC and the L.N. Mittal Group, which have two joint ventures for overseas business, have decided to put their trading venture on the back-burner till they work out a new strategy for it. The two partners are also hopeful of having a new chief executive officer (CEO) for their other venture, ONGC-Mittal Energy Ltd (OMEL), soon.

OMEL is a joint venture between ONGC Videsh Ltd, the overseas investment arm of ONGC, and Mittal Investment Sarl, a group company of Mittal, for acquiring oil and gas assets abroad.

Official sources told Business Line that the partners reviewed the activities of the two joint ventures on Saturday. A top item on the agenda was the selection of a new CEO for OMEL since the previous incumbent, Mr Naresh K. Nayyar, has left the organisation. While declining to disclose the names of the candidates who are in the running for OMEL CEO, sources said, “Two to three names have been short listed. Discussions took place on these. We are working on the terms for the contract.”

The hunt for a new CEO started when Mr Nayyar resigned from his position last year. Mr Nayyar was appointed the first CEO of OMEL when it was formed in July 2005, and he has now joined the Essar Group as the Chief Executive Officer (CEO) of Essar Energy Holdings Ltd (EEHL) and Managing Director of Essar Oil Ltd (EOL).

OMEL was formed to cash in on the strength of ONGC Videsh and the Mittal Group to acquire oil and gas assets in 27 countries. Since its inception, the company has bagged two lucrative oil blocks in Nigeria, one gas block in Trinidad and Tobago, an oilfield in Syria and a gas block in Turkmenistan.

As regards putting the second joint venture, ONGC-Mittal Energy Services Ltd (OMESL), on the back burner, company sources said, “Though the activity of the trading venture is linked to the business of OMEL, we don’t want to go into speculative market.” Thinking is going on for developing a more attractive business model for OMESL. The intent behind setting up OMESL was to have a vehicle for trading of OMEL’s share of crude.

The joint venture partners are likely to work out fresh strategies for OMESL. However, sources were quick to point out that there is no plan to wind up OMESL.