MercoPress. South Atlantic News Agency

Indian-Russian consortium interested in YPF

ONGC chairman RS Sharma said the company is continually looking for opportunities

The Economic Times from Mumbai published on its online edition an article informing that Indian government owned energy company ONGC Videsh Ltd and its overseas investment branch, OVL, is having conversations with three Russian companies -Rosneft, Lukoil and Gazprom- for acquiring a substantial stake in YPF, the Argentine arm of Spanish oil major Repsol YPF SA.

The total holding of Repsol YPF in the Argentine company is 84%, with a potential deal having a ticket size of over 17 billion US dollars. The exact quantum of stake OVL may acquire remains unclear.

A person privy to the discussions said OVL would put in a bid with at least one of the Russian companies. While Rosneft is an integrated petroleum firm owned by the Russian government, Lukoil is the country's largest oil company. Gazprom is the largest Russian company apart from being the largest extractor of natural gas globally. In the past, ONGC has worked with these companies on various projects.

ONGC chairman RS Sharma declined to comment specifically on the YPF transaction. “We continuously look for opportunities,” he told Economic Times, adding that both ONGC and OVL would not speak on their acquisition strategy. ONGC is believed to hold cash reserves of 5 billion USD.

China National Petroleum Corporation (CNPC), China's largest oil and gas producer, has also put in a joint bid with China National Offshore Oil Corporation (CNOOC), another large oil player.

Madrid-headquartered Repsol YPF, an integrated oil and gas major, has a large proportion of its assets in Spain and Argentina. In 1999, Repsol, the Spanish conglomerate took over Argentina's YPF. Today, a large proportion of the combined entity's assets are spread across the two countries.

At the end of 2008, YPF's proven natural gas reserves had fallen to 377 billion cubic feet (bcf) from a level of 459 bcf in 2006. Its proven oil reserves were 137 mt at the end of last year compared to 163 mt at the end of 2006.