New Delhi, July 23
THE State-owned Oil and Natural Gas Corporation and Mittal Investments Sarl, one of the investment arms of the L.N. Mittal group, entered into two memoranda of understanding to form two overseas joint ventures companies - ONGC Mittal Energy Ltd (OMEL) and ONGC Mittal Energy Services Ltd (OMESL).
The first MoU was between ONGC Videsh Ltd (OVL), the overseas arm of ONGC, and Mittal Investments Sarl for establishing a joint venture,OMEL.
In OMEL, 98 per cent equity will be held in proportion of 51 per cent with OVL and 49 per cent with Mittal Investment, and the remaining 2 per cent equity will be held by financial institutions. The second MoU was signed between ONGC and Mittal Investments Sarl for setting up OMESL, with a similar shareholding pattern for co-operation in trading and shipping of oil and gas (including liquefied natural gas), sourced through ONGC-Mittal Energy Ltd.
In other words, in both the ventures, ONGC will hold 49.98 per cent stake while LNM will have 48.02 per cent equity. The remaining 2 per cent will be with ICICI.
Initially, both ONGC and Mittals will put an equity participation of $50 million each in the joint ventures, sources said.
The two groups will co-operate in exploration, development, production, evacuation and related consequential processing of hydrocarbons in the form of oil, condensates or gas (including LNG) in various countries, Mr Subir Raha, Chairman and Managing Director of ONGC, said.
He also said the deal is to secure energy security for the country through global resources.
Mr Laxmi N. Mittal, Chairman and CEO, Mittal group, said, "Our business is in oil dominating nations, and the nations have been requesting us to look at oil business. Jointly, we can play a very important role in securing energy security for the country."
On the countries where the joint ventures would foray into, sources said Canada-based PetroKazakhstan and Nigeria might be their first targets. The joint venture companies are likely to be set up in a EU country, most probably Cyprus.
The two joint venture companies target oil and gas opportunities in Central Asian countries and Africa.
During the MoU signing ceremony, the Petroleum Minister, Mr Mani Shankar Aiyar, said the joining of the two titans is a preparation for Indian bids for global oil giants such as Unocal.