India in touch with Kazakhstan after bid falls through

    By Saurabh Chaturvedi
    India's foreign ministry is in contact with the Kazakhstan government to discuss future energy cooperation following its decision to block state oil company Oil & Natural Gas Corp.'s 500312.BY -0.30% bid to buy into the country's giant Kashagan oil project.
    ONGC had been shocked by the Kazakh decision and had asked the government to seek an explanation for the decision, said a person familiar with the situation.
    An artificial island on the Kashagan offshore oil field in 2009; the government of Kazakhstan is buying a stake in the field from ConocoPhillips.
    "Following the decision taken by the Kazakhstan government, we are in touch with the Kazakhstan government to discuss future prospects of cooperation in the energy sector," said foreign ministry spokesman Syed Akbaruddin.
    Indian officials accept privately that the Kazakh government has the right to block ONGC's purchase of the 8.4% stake held by ConocoPhillips COP +0.08% .
    The Kazakhstan government's intervention is a blow to India's efforts to improve its access to foreign energy resources as it meets more than 80% of its crude oil needs from imports.
    "This is not fair. India deserves a reason from them for pre-empting the bid," the person told The Wall Street Journal. He declined to be named.
    Kazakhstan's ministry of oil and gas Tuesday said it had notified ConocoPhillips that the government is "exercising its right under the Subsoil Law of Kazakhstan to pre-empt ConocoPhillips' proposed sale of its…interest in the North Caspian Sea Production Sharing Agreement."
    ONGC reached a draft agreement in November 2012 to buy the stake from ConocoPhillips.
    The U.S. company has confirmed that it will now sell its stake in Kashagan to Kazakh state energy company KazMunaiGas for approximately $5 billion, and that the transaction is expected to close in the fourth quarter of 2013.
    Kashagan is a joint venture between KMG and a raft of major international companies: Eni SpA, ENI.MI -0.44% Exxon Mobil Corp., XOM +0.06% Royal Dutch Shell RDSB.LN -1.31% PLC, Total SA FP.FR -0.32% and Inpex Corp. 1605.TO +0.23%
    The Kashagan field was discovered in 2000 and production was due to start in 2005, at a total development cost of $10 billion. However, technical setbacks caused delays and the project cost has ballooned.
    Production is due to start later this year, rising to 180,000 barrels a day by the end of 2014, the joint
    venture company in charge of development said Sunday, the Wall Street Journal reports.