ONGC blames Kazakh act in breaking deal with ConocoPhillips

State-run ONGC Ltd today confirmed that it has lost the $5-billion bid for ConocoPhillips’ stake at Kashagan oilfield in Kazakhstan, as the Kazakhstan government has used its first right of refusal to facilitate the deal for its national oil company KazMunayGaz (KMG).

“Based on the communication received through ConocoPhillips (COP), the Government of Kazakhstan has announced that in accordance with the Republic of Kazakhstan Law (ROK) on subsurface and subsurface use, ROK has exercised its priority right and pre-empted the bid by ONGC Videsh to acquire the 8.4% stake of ConocoPhillips in the North Caspian Sea Production Sharing Agreement (NCS PSA),” ONGC Videsh (OVL) said in a statement.

It is believed that it was the Chinese national oil company the China National Petroleum Corp (CNPC) has managed to overturn OVL’s bid.

ONGC Videsh had finalized the definitive agreements in November 2012 for acquisition of 8.4% participating Interest of ConocoPhillips in the NCS PSA. “The bid of ONGC Videsh was not pre-empted by the co-venturers of the NCS PSA within in the stipulated time period that ended in January 2013,” the statement added.

The Kashagan field, located in the shallow waters of the Kazakh North Caspian Sea, is the world's largest current development project. Kashagan’s consortium partners are Eni, Total, Shell, ExxonMobil and KazMunaiGaz, each with 16.81% stake, while ConocoPhillips holds 8.4% and Inpex has 7.56%.