The Hindu Business Line : Diplomatic-level talks likely over award of Kazakh oil block

Taking note of Kazakhstan's offer to informally link the award of an oil block in that country with India's support for its entry into the World Trade Organisation (WTO), the Ministry of Petroleum and Natural Gas plans to suggest that the Commerce Ministry should negotiate some concessions with the Kazakh Government. Consequently, discussions on the bid by ONGC Videsh Ltd (OVL), the overseas arm of ONGC, to acquire stake in Kazakhstan's Satpayev block in Caspian Sea may now witness negotiations at a higher diplomatic level.

"Since Kazakhstan has hinted that the offer of a stake in the oil block would be linked with India's support for its entry into the WTO, the Petroleum Ministry is likely to suggest to the Commerce Ministry that concessions may be sought from Kazakhstan while taking a view on the issue," a senior Petroleum Ministry official said.

The Kazakh Minister of Energy and Mineral Resources, Mr Baktykozha Izmukhambetov, during his recent visit to India had said that support for his country's entry into WTO was not a `conditionality' for awarding a stake in the oil block but an issue which is a part of negotiations between the two countries.

Proven reserves

If successful, this will be India's first venture in Kazakhstan, which is one of Central Asia's largest producers of oil and gas. Earlier, OVL — the best bidder for acquisition of PetroKazakhstan, which accounts for about 12 per cent of oil production in Kazakhstan and is the third largest oil producer in that country — missed this opportunity to China.

According to international reports, Kazakhstan has proven oil reserves of 13.8 billion barrels and 68.5 trillion cubic feet of natural gas. Following a decision of an earlier Joint Working Group meeting in 2005, OVL and KazMunaiGaz (KMG) had undertaken a joint study of two blocks of the Kazakhstan part of the Caspian Sea — Satpayev and Makhambet. Satpayev had emerged as the preferred block for joint development.

Acquiring an asset in Kazakh would be profitable for OVL, sources said. "Caspian Sea has seen some good discoveries being made. Besides, Satpayev is an exploration block and the joint study has shown that this is a prospective block." For ensuring the country's energy security, Indian oil and gas exploration and production companies have been looking for substantial acreages abroad and getting this block could clearly be conceived as a lucrative deal for ONGC if it happens through bilateral talks on nomination basis, the sources said.

Minority stake likely

Initially, the Kazhaks had offered India 50 per cent stake in the Satpayev block on nomination basis, but indications are that KMG is now offering only a minority stake to OVL and LN Mittal combine. OVL had roped in Mittal, which has a big presence in that country, for buying stake in the Satpayev block in Kazakhastan. OVL and Mittal combine have now been offered 20-25 per cent stake in the Satpayev exploration block.

Asked whether any time line has been worked out for entering into a definitive agreement on the project between the two countries, as agreed during the India-Kazakhstan Joint Working Group meeting, the official said, "constant discussions are going on between the companies of the two countries."

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