ONGC denies $5 bn bid for ConocoPhillips assets
New Delhi   26-Sep-2012

The oil and gas behemoth ONGC today denied reports that the state-run company has bid USD 5 billion for the Canadian assets of ConocoPhillips along with Oil India and IndianOil, but said it is looking at international assets purchases.

Denying any credibility to the report appearing in media that it has already bid for the four CBM blocks of ConocoPhillips in Canada, ONGC chairman and managing director Sudhir Vasudeva said, "the source clearly is not ONGC. I want to deny that we have made any such bids." Stating that the company is always on the lookout for opportunities to buy asset, he said all he could tell is that ONGC is looking at these four CMB blocks, which are up for sale.

"We keep on looking at opportunities in the market but it is not right to keep on commenting on them. As such deals are sensitive and there are confidential agreements to be signed so it is not correct to comment on them. But I can't give you a timeline, though it is going to be shortly.

"But I can categorically say that we have not made a bid yet for the USD 5 billion deal," Vasudeva said on the sidelines of an All-India Management Association summit here. Media reports quoting unnamed ONGC Videsh sources had said yesterday that it along with Oil India and IndianOil has bid USD 5 billion for stakes in Canadian oil sands assets owned by ConocoPhillips.

According to the report, they submitted the bids in late July.

In January, ConocoPhillips put stakes in six Alberta sands properties on the block. They produce 12,000 barrels of oil a day from an estimated 30 billion barrels of bitumen.

ONGC Videsh, which is the overseas investment arm of ONGC, had recently bought the 2.7 percent stake of Hess in the large Azeri, Chirag and Guneshli (ACG) Group of oil fields in Azerbaijan. On the Central auditor CAG castigating the company for hiring a deep-sea drilling rig from Reliance without inviting competitive bids, Vasudeva said they are in the process of studying the CAG report and replying to the same.

"We have replied in the past but our view has not been taken into consideration. There were valid reasons. We have gone through a rigid process, rigorous process of diligence etc, duly approved by the board and accordingly we had gone ahead and taken this.

"Anybody will not deliberately sell something wrong. We don't think we have done anything wrong, but if there are difference in perceptions, then we will correct those perceptions. That can be done only through dialogues and discussions," the ONGC chairman said. But to a query on when is the ONGC likely to respond to the CAG, he shot back saying "I can't reply to it now."

The Comptroller & Auditor General, in a report tabled in Parliament late last month, had hauled up ONGC for hiring a deep sea drilling rig from Reliance Industries without calling for competitive bids and said that the deal was untenable.

The CAG report said ONGC "deviated from the standard tendering procedure and hired a rig viz Dhirubhai Deepwater KG-1 (DDKG-1) from RIL without calling for competitive bids for a period of four years on untenable grounds."

In May 2009, ONGC had hired the DDKG-1 from RIL for four years ending July 2013 without calling for competitive bids at an operating day rate of USD 495,000 for first 180 days and at USD 510,000 from 181st day onwards. The effective day rate worked out to USD 563,488.

CAG said the company in December 2008 projected a requirement of rig capable of drilling in ultra deep water (water depth of 10,000 ft) by December 2010 to meet its work commitment in exploration block it had won under NELP rounds.

The rig, CAG pointed out, was in fact hired by RIL from Deepwater Pacific-1 Inc in October 2007, for five years commencing July 2009 and ending July 2014.