ONGC-Mittal signs deal to take 25% stake in Kazakh oilfield

Oil and Natural Gas Corp and its billionaire partner Lakshmi N Mittal on Saturday signed an agreement to take a 25% stake in
Kazakhstan's prospective Satpayev oil field in the Caspian Sea.

ONGC Mittal Energy Ltd, the joint venture of ONGC Videsh Ltd and Mittal Investment Sarl, signed the agreement with Kazakhstan's national oil firm KazMunaiGas (KMG) for the stake, official sources said.

OVL Managing Director R S Butola signed the agreements on behalf of OMEL and for KMG its President Kairgeldi Kabyldin inked the deal.

The agreement is clumination of nearly four years of negotiations during which Kazakhstan went back and forth on giving stake to the Indian company.

Kazakhstan had initially identified the Satpayev and Makhambet blocks in the Caspian Sea for giving a 50% stake in one of them to OVL, the overseas arm of state-owned ONGC. Later it reduced the stake on offer to 25% on condition that the Indian flagship teamed up with steel baron Lakshmi N Mittal for entry.

OVL relented and in June 2007 made an attractive commercial proposal to KazMunaiGas (KMG), but in subsequent negotiations, Kazakhstan's state-run firm did not agree on the percentage of stake OVL would get. It also did not agree on giving operatorship to OVL during the exploratory and appraisal stages.

Kazakhstan today finally decided to sign the agreement. KazMunaiGas will hold the remaining 75% stake in Satpayev.