India seems to have almost clinched the latest round in the global politics of oil and gas with state-owned ONGC Videsh Ltd’s (OVL’s) $2.58 billion bid for UK-registered Imperial Energy being favoured by the company’s management over that by rival Sinopec, the Chinese government-owned oil behemoth.

Imperial, though a little known company, is termed by many as a “bluechip petroleum engineering company”. It has assets in Russia with considerable proven reserves. OVL’s near victory over Sinopec comes after a number of aborted or failed attempts by OVL to grab a pie of the global oil equity. In the last couple of years, China’s aggressive bidding has seen it walk away with prized catches such as Encana in Ecuador, Petro Kazakhstan, Marathon Oil Corp and the BP-operated Block B in Angola.

This deal could be the mother of all takeovers in the Indian energy sector. OVL has valued Imperial at 1.4 billion pounds (around Rs 11,300 crore or $2.58 billion). Imperial, set up only four years ago, is an independent upstream oil exploration and production company focused on the Commonwealth of Independent States and, in particular, the Russian Federation. It is listed on the LSE. It made oil sales of $19.9 million and an operating loss of $39 million in 2007 as against $3.1 million and $ 15.2 million respectively in 2006.

The offer will be made Bidco, a wholly-owned subsidiary of OVL incorporated in Cyprus and formed for the purpose of making offers. OVL is a wholly-owned subsidiary of Oil and Natural Gas Corporation Limited, the largest oil and gas exploration and production company in Asia. The primary business of OVL is the exploration and production of oil and gas outside India.

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