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ONGC Videsh eyes energy assets in US; Oil India close to buying Africa asset

MUMBAI: After Kazakhstan, Azerbaijan and Mozambique, ONGCBSE 3.22 % Videsh (OVL) and Oil India (OIL) have set their sights on acquiring new oil and gas assets in the US and Africa. 

OVL is evaluating Chesapeake Energy's oil and gas assets. Chesapeake, which is the second largest natural gas producer in the US, had put its oil and gas assets on the block in February last year to raise up to $11.5 billion and reduce debt. Its most significant asset is the Permian Basin oilfields in Texas, which is the largest oil-producing area in the US. 

"We have seen Chesapeake's assets across the US. They are good assets, they were one of the first companies to start large-scale gas production in the US, we are evaluating it," said a senior OVL executive. 

A senior ONGC executive also confirmed the development and said the state-owned firm had targeted 11% annual growth in overall global E&P portfolio with a six-fold increase in overseas portfolio in the next three years. " 
Yes, Chesapeake's gas assets are on the radar and this fits in with our overall plan to aggressively acquire global energy assets," the ONGC executive confirmed. 

On being contacted, Chesapeake declined to comment. 

Then, Oil India is close to acquiring another gas asset in Africa for $200 million a senior OIL executive said. "We will be announcing another acquisition of a significant oil and gas asset for about $200 million in Africa by July end," the executive said, adding, "we are in the final stages of negotiations currently." 

Company insiders say this could be the Gabon assets of France's oil and gas major Maurel et Prom SA, which was recently acquired by Indonesian energy company Pertamina. Oil India had earlier said it was keen to acquire these assets despite the change in ownership and has already done a technical and financial due diligence and plans to take it to the company board soon. 

Saying it had the financial wherewithal, the ONGC executive said, "Of the Rs 27,000 crore cash reserves that ONGC has, we will have close to 13,000-14,000 crore for these acquisitions and the balance OVL can raise by borrowing which will be guaranteed by ONGC." 

On Monday, OVL and Oil India announced they had finalised an agreement to acquire consumer durable major Videocon Industries' 10% stake in the gas-rich Rovuma basin in Mozambique for $2.48 billion. 

The Mozambique acquisition is OVL's third significant global acquisition since last year, when it bought Hess Corp's 2.7% stake in Azerbaijan's largest oil field and an associated pipeline for $1 billion. It also bought ConocoPhillips's 8.4% stake in Kazakhstan's Kashagan project for $5 billion last November. 

These came after OVL's $2 billion purchase of the Imperial assets in Russia in 2009. Since the acquisition, OVL has had problems with these assets and was recently hauled over the coals for the poor progress there by the CAG. 

The company failed to produce the targeted 35,000 barrel per day (bpd) after having downwardly revised the expected target twice.