ONGC, IndianOil & OIL to bid for a stake in Conoco’s oil sand assets
Mumbai   12-Jul-2012

State-run oil majors Oil and Natural Gas Corporation of India (ONGC), IndianOil, and Oil India (OIL) have formed a consortium to place the binding offer for a stake in oil sands assets worth over $5 billion owned by Houston-based ConocoPhillips.

They have appointed a boutique investment bank in Canada, TD Waterhouse, the advisor for the transaction, two people with direct knowledge of the development said.

The companies, among the shortlisted bidders, have sought loans from a clutch of banks last week to finance the deal, one of the people quoted above said. Deutsche Bank, Standard Chartered Bank and Bank of America-Merrill Lynch are amongst leading bankers likely to participate in funding the trio's bid, the source said.

ONGC is bidding for the stake through its overseas arm ONGC Videsh (OVL). Though the structure of the deal is yet to be finalized, the three oil majors are likely to form a common overseas special purpose vehicle (SPV) to acquire the assets if they emerge as the winning bidder.

OVL's managing director, DK Sarraf, told ET Now on 4th July that the company would not comment on potential transactions. He was not available for comment on Tuesday. PK Goyal, Director (finance) at IndianOil declined to comment on the story, but another top IOC executive confirmed that the three companies had held discussions and ONGC Videsh would lead the negotiations. Oil India could not be reached for comment.

The three-member consortium is bidding for a stake in six properties owned by ConocoPhillips in Alberta, Canada. One of the properties produces about 25,000 barrels per day of oil. The six properties collectively have the potential to produce up to 500,000 barrels per day of oil according to some estimates. ConocoPhillips did not respond to an email query seeking comment on the story.

India, the world's fourth-largest oil importer, meets about 80% of its crude needs through overseas purchases. It is scouting for oil and gas assets abroad to meet demand in a fast-growing economy and to feed its expanding refining capacity.

ConocoPhillips said in January it was looking for partners to continue exploration at some of its Canadian properties. The company appointed the investment banking arm of Bank of Nova Scotia to run the auction process for divesting a stake in the assets.

Conoco recently completed the spinoff of its refining activities into Phillips 66, a newly-created independent US company, and has been looking to divest some of its non-core assets as part of a global restructuring exercise.