ONGC steps on the gas, eyes UK’s Premier Oil
India’s largest oil producer, ONGC, may consider making a bid for UK-based Premier Oil to add assets in the oil-rich North Sea and Indonesia to its expanding global portfolio. ONGC chairman and managing director RS Sharma said the company has not placed any official bid yet. “We have not done any due diligence or placed any official bid.
We are still evaluating options,” Mr Sharma told ET. Asked if the bid would be routed through its overseas arm ONGC Videsh (OVL) or its 51:49 JV, ONGC Mittal Energy (OMEL), Mr Sharma said the decision would be taken later.
Earlier on Friday, agency reports said ONGC is putting together a bid through OMEL owned by steel tycoon Lakshmi Mittal. Reports quoted a senior Indian government source as saying that the decision was aimed at using Mittal’s strengths in Europe to its advantage.
“Premier Oil has been a takeover target for long. Besides ONGC, global oil majors like the Royal Dutch Shell group of companies, a UAE-based company and Mexico’s Pemex are strong contenders to acquire Premier Oil,” said a senior investment banker.
ONGC has been aggressively scouting for oil assets abroad to build a portfolio of blocks with rich prospects. It has invested about $1.7 billion in Sakhalin with Exxon-Mobil and in Sudan. It is also scouting for opportunities in Nigeria and Africa’s west coast. After the much publicised failure to acquire Kazakh Oil in ’05, OMEL is eager to make an acquisition and is examining the possibility of making an offer.
Premier Oil produces oil from North Sea and Indonesia, two regions rich in hydrocarbon reserves. The company could be worth as much as $2 billion. It also has assets in Pakistan which could become a problem for ONGC or any other Indian company if it manages to acquire Premier Oil.
Last month, Premier Oil confirmed that it has received a preliminary and conditional proposal regarding a possible offer for the company. The proposal is subject to a number of conditions, including due diligence and financing.
Discussions are at an early stage and there can be no certainty that an offer will be made or about the terms on which an offer may be made. A further announcement will be made when appropriate. ONGC is tipped to be a better suitor for Premier Oil because ONGC and Premier are already consortium partners in the Ratna oil fields in the Mumbai offshore.
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