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http://blogs.ft.com/beyond-brics/2012/02/28/cove-indians-
may-top-thais-and-shell/#ixzz1seOclgn1
Last week, the Thais topped the Dutch. This week, it may be
the Indians’ turn.
the Indians’ turn.
Two state-run resources companies, Oil and Natural Gas
Corporation and GAIL India, may be considering bidding
$2bn for the UK’s Cove Energy, according to the Times of
India on Tuesday, in a move that would trump both
Thailand’s PTT Exploration & Production’s $1.7bn bid and
Royal Dutch Shell’s $1.6bn bid.
Corporation and GAIL India, may be considering bidding
$2bn for the UK’s Cove Energy, according to the Times of
India on Tuesday, in a move that would trump both
Thailand’s PTT Exploration & Production’s $1.7bn bid and
Royal Dutch Shell’s $1.6bn bid.
Analysts said that Cove would be a tricky purchase for the
Indian companies: on one hand, they would gain for gas-
deficient India a stake in what is potentially one of the
world’s largest gas reserves; on the other, the field is a
deepwater project, full of technological challenges (as,
closer to home, India’s Reliance Industries and BP have
discovered in the Bay of Bengal).
Indian companies: on one hand, they would gain for gas-
deficient India a stake in what is potentially one of the
world’s largest gas reserves; on the other, the field is a
deepwater project, full of technological challenges (as,
closer to home, India’s Reliance Industries and BP have
discovered in the Bay of Bengal).
“I don’t think it’s prudent to get into a bidding war to
acquire it because it’s a deepwater asset and there is some
uncertainty there,” Dikshit Mittal, analyst at SBI Capital
Markets, told beyondbrics. “The kind of reserve they’re
talking about is the second or third largest in the world and
it’s deepwater so it would need huge amounts of
investment.”
acquire it because it’s a deepwater asset and there is some
uncertainty there,” Dikshit Mittal, analyst at SBI Capital
Markets, told beyondbrics. “The kind of reserve they’re
talking about is the second or third largest in the world and
it’s deepwater so it would need huge amounts of
investment.”
“If you see what has happened with RIL’s [Bay of Bengal]
blocks,” he added, “initial estimates were very high and now
it is much lower production.”
blocks,” he added, “initial estimates were very high and now
it is much lower production.”
Following a report in Tuesday’s Times of India ONGC
Videsh, the overseas arm of ONGC, India’s largest oil
company, acknowledged in a statement that it and GAIL ,
India’s dominant gas group, were “currently participating
in the formal sale process announced by Cove”, but sources
at both companies declined to elaborate.
Videsh, the overseas arm of ONGC, India’s largest oil
company, acknowledged in a statement that it and GAIL ,
India’s dominant gas group, were “currently participating
in the formal sale process announced by Cove”, but sources
at both companies declined to elaborate.
ONGC’s release continued:
At this stage, no decis
ion has been made by the Consortium
which any such offer may be made. Therefore, there can bewhereher to make an offer for Cove or the price at
no certainty that the Consortium will make an offer for
Cove, or as to the terms of any offer.
The Indian bid would value Cove shares at 245 pence, well
above state-controlled PTT Exploration’s 220p bid and
Shell’s 195p offer – and slightly above where the shares
were trading by 10:57am UK time, at 239 pence.
above state-controlled PTT Exploration’s 220p bid and
Shell’s 195p offer – and slightly above where the shares
were trading by 10:57am UK time, at 239 pence.
Cove’s key asset, and the main reason for the bidding war, is
its 8.5 per cent interest in Mozambique’s Rovuma offshore
gas basin – which the operators, US-based Anadarko
Petroleum, with a 36.5 per cent working interest, have
dubbed “one of the most important natural
gasfieldsdiscovered in the last 10 years”.
its 8.5 per cent interest in Mozambique’s Rovuma offshore
gas basin – which the operators, US-based Anadarko
Petroleum, with a 36.5 per cent working interest, have
dubbed “one of the most important natural
gasfieldsdiscovered in the last 10 years”.
The Indian consortium could join two other Indian
companies – state-owned Bharat Petroleum and privately
owned Videocon Industries, which each already have a 10
per cent stake in the field
.
companies – state-owned Bharat Petroleum and privately
owned Videocon Industries, which each already have a 10
per cent stake in the field
.
Venugopal Dhoot, chairman of Videocon Industries, told the
Times of India he thinks it could make India major players
in the field: “If ONGC comes in, Indian companies will hold
28.5 per cent and will have more say in the gigantic gas
find. It will provide us economies of scale.”
Times of India he thinks it could make India major players
in the field: “If ONGC comes in, Indian companies will hold
28.5 per cent and will have more say in the gigantic gas
find. It will provide us economies of scale.”
The market took news in their stride. Cove shares rose 1.70
per cent by 11:08am, while shares in ONGC and GAIL closed
up 0.84 per cent and 0.71 per cent, respectively. But it’s clear
that the battle for Cove is far from over. It may have only
just begun.
per cent by 11:08am, while shares in ONGC and GAIL closed
up 0.84 per cent and 0.71 per cent, respectively. But it’s clear
that the battle for Cove is far from over. It may have only
just begun.
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