China’s Sinopec, India’s ONGC take Omimex stake

Beijing and Delhi have been discussing cooperation on global oil and gas deals as their oil import bills expand, and the chairman of India’s Oil and Natural Gas Corp. said they hoped for “many more” overseas deals with Chinese partners.

Analysts described the firm’s Colombian acquisition with China’s number-two oil company Sinopec as a minor deal, and said there were scant signs China was willing to share juicier opportunities like off-shore blocks recently acquired in Angola.

“Strategically, its not important ... China and India have done two deals together but both of them are tiny, they don’t have any material impact,” said David Hurd, oil and gas analyst at Deutsche Bank in Beijing.

But the bid pleased investors, with ONGC shares closing up 1.65 percent up at 1213.55 rupees in a firm Mumbai market. The benchmark BSE Sensex rose 1.08 percent at 11313 points.

“I am glad to announce our bid with Sinopec has been accepted,” Oil Minister Murli Deora told reporters in the northern Indian town of Dehradun during ONGC’s golden jubilee celebrations, confirming earlier media reports.

He said the stake would net India 1 million tonnes of oil a year, or around 20,000 barrels per day.

An Indian oil ministry official who declined to be identified said the combined stake was worth $800 million. China’s official Xinhua news agency had reported both firms would take equal 25 percent stakes in Omimex, citing the Indo-Asian News Service.

Omimex de Colombia is a 100 percent subsidiary of Omimex Resources, a US-based exploration and production company.

It has five fields in Colombia but only three are onstream and producing, with total remaining commerical reserves of under 60 million barrels, said Marc Swales, Latin America analyst with consultants Wood Mackenzie.

The remaining two fields are technical discoveries with reserves of under 2 million barrels each and no production infrastructure in place, he added.

Neither Omimex nor Sinopec could be reached for comment.

Bidding wars

The deal is the first time ONGC Videsh Ltd. (OVL) -- the Indian firm’s overseas arm -- has paired up with Sinopec Group, parent of listed Sinopec Corp..

In February it joined forces with China National Petroleum Corp., the country’s top oil producer, for a pioneering $580 million Sino-Indian takeover of Syrian assets of Petro-Canada.

Officials promoting cooperation across the Himalayas argue that as they scour the globe for resources to fuel their booming economies the two nations are sucked into bidding wars that benefit only producer nations.

But ONGC has repeatedly lost out to Chinese rivals in the race to acquire fields in Angola, Nigeria, Kazakhstan and Ecuador, and many analysts are sceptical about what China stands to gain from cooperation.

However the price tag for Petro-Canada’s 38 percent interest in the Syrian Al Furat venture was less than some analysts had speculated, which bankers said was the result of the joint bid and could herald more such deals.