From Stockhouse board
Looks like ONGC is hunting for a take out.OPC and CLL are ripe for the picking IMO. In less than 2 weeks one or both could be gone by the timing stated in this PR.
NTPC, ONGC Set to Get Acquisition ‘Firepower’ to Take on China
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By Rakteem Katakey
April 28 (Bloomberg) -- Oil & Natural Gas Corp., India’s biggest explorer, and Indian Oil Corp. are set to get approval from the government to spend five times more on acquisitions, giving them greater freedom to compete with China for assets.
NTPC Ltd. and Steel Authority of India Ltd. are also expected to be permitted to make 50-billion-rupee ($1.1 billion) takeovers without government clearance, Bhaskar Chatterjee, secretary in the Department of Public Enterprises said in an interview. The state-run companies, which can now invest 10 billion rupees, may get the higher limit in three weeks, he said.
“This gives us more firepower,” R.S. Sharma, chairman and managing director at New Delhi-based ONGC, said by telephone yesterday. “This will give us some strength.”
Indian companies are competing with Chinese competitors for energy assets to meet demand in the world’s two most populous nations. State-run Chinese companies spent a record $32 billion last year acquiring resources overseas while a $2.1 billion purchase by ONGC was the sole energy investment by India.
“This will help speed up decision making, which has been a reason for deals falling through,” Jagannadham Thunuguntla, chief strategist at SMC Capitals Ltd. in New Delhi, said by telephone yesterday. “It is a step in the right direction and the government needs to continue giving them more freedom.”
Highest Ranking
The four companies will be permitted to spend more under a government classification system that will accord them so-called “maharatna” status, or the highest ranking for state-run enterprises.
India’s cabinet approved maharatna, which means mega jewel in Hindi, on Dec. 24, without naming the companies. State-run enterprises must have annual revenue of 250 billion rupees and profit of at least 50 billion rupees in the past three years to be considered for the status.
“Being a maharatna company will help us to get mines abroad quicker,” R.S. Sharma, chairman and managing director of NTPC, said by telephone. “We will get certain strategic advantages.”
Steel Authority spokesman R.K. Singhal did not answer calls to his mobile phone and Indian Oil Chairman B.M. Bansal didn’t immediately comment.
China Petrochemical Corp. agreed to pay ConocoPhillips $4.65 billion for its stake in Syncrude Canada Ltd., a tar-sands producer, capping $64 billion of spending on resources since 2005.
Cnooc Ltd., China’s biggest offshore oil explorer, agreed to buy half of Argentina’s Bridas Corp. on March 14 for $3.1 billion, its biggest purchase. Cnooc bought a stake in a Nigerian oil field in 2006 after India’s government blocked ONGC’s plan to do the same.
Sovereign Fund
“China’s economy is much bigger than us and that helps them buy assets,” Chatterjee said. “Once our companies get the maharatna status we can certainly attempt to take them on.”
India’s oil ministry has proposed creating a sovereign wealth fund using the nation’s $256 billion foreign exchange reserves to buy energy assets overseas. China has reserves of $2.5 trillion, according to data compiled by Bloomberg.
The ministry has ordered ONGC and Oil India Ltd., the second-biggest state explorer, to acquire at least one big asset each in the year ending March 31, S. Sundareshan, the senior- most bureaucrat in the ministry, said March 18.
Indian Oil, the country’s second-biggest refiner, and Oil India made a $580 million bid for London-based Gulfsands Petroleum Plc last month that was rejected. ONGC is seeking to buy oil-sands assets in Canada, three people familiar with the matter said March 25.
The government may sell a stake in Indian Oil by March 31, Sidhartha Pradhan, joint secretary in the department of disinvestment, said yesterday. India plans to raise a record 400 billion rupees ($9 billion) from asset sales this financial year and use the proceeds to reduce its budget deficit.
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