OVL-Sinopec to buy 50% in Columbian co for $1bn

DEHRADUN: The OVL-Sinopec combine is set to buy out the stake of Omimex de Columbia, a Delaware-listed company operating in Columbia for an estimated $1bn.

The bid , the second to be put in collaboration with a Chinese oil major, is favourably positioned and by all indications the deal will be sealed by a month.ET had first reported about this deal on July 21. OVL had earlier won an oil asset in Syria by putting in a joint bid with CNPC.

Speaking at the golden jubilee celebrations of ONGC in Dehradun, petroleum minister Murli Deora said, “ONGC’s overseas investment arm ONGC Videsh (OVL) has emerged successful bidder to acquire a 50% equity stake in Omimex de Columbia, an oil company in Columbia. The deal would help India in getting about 1m metric tones of crude oil annually.”

While 50% of the stake will be held by the OVL-Sinopec combine, the balance 50% stake will be held by national Columbian oil firm Ecopetrol. Omimex started off its operations in Colombia with one producing field, and has consolidated its position by acquiring exploration blocks in the northern part of the country, on the Caribbean coast.

It also has a 50% interest in two discovered blocks where Ecopetrol has the balance 50% stake. Besides the oil blocks, the company has 100% stake in a pipeline project that connects Ecopetrol’s Barrancabermeja refinery.

“The bid has been accepted and we would get about 1m metric tonne of crude oil every year,” Mr Deora said. OVL’s JV with a Chinese firm is a 50:50 partnership, which in turn would help OVL to claim 25% in the oil field in Columbia. According to sources, the deal would cost OVL $400m.

Omimex de Columbia has onshore producing as well as exploration blocks in Columbia, with net proven reserves of around 157m barrels. Omimex de Colombia, is 100% owned by the US exploration and production company Omimex Resources.

The Cabinet Committee on Economic Affairs (CCEA) on August 3, had already approved the OVL-Sinopec joint bid for the acquisition.

ONGC chairman RS Sharma confirmed that the deal. He, however, refused to disclose other details. “There is an understanding between the two parties not to disclose the transactions details unless we sign the deal,” he said. The deal is expected to be signed by September ‘06.

Mr Sharma said that ONGC would be looking for similar JVs with Chinese firms even in future. “We are looking for many more deals with Chinese companies,” he said.