In his first major oil deal, billionaire Lakshmi N Mittal has acquired Russian oil firm Lukoil’s 50 per cent stake in a Kazakhstan oil firm for $980 million (Rs 4,000 crore). Mittal Investments will also take over half of Caspian Investments Resources Ltd’s (CIR) outstanding debt, which is equivalent to about $175 million, Moscow-based Lukoil said in a statement.
CIR has equity in five Kazakh oil fields — Alibekmola, Kozhasai, Northern Buzachi, Karakuduk and Arman — in the Aktyubinsk and Mangistau regions. Current production from the fields, which have total proven reserves of some 270 million barrels, is more than 40,000 barrels per day and is set to increase in the coming years.
“Caspian Investment Resources Ltd, which was Lukoil Overseas’ 100 per cent subsidiary, has become a joint venture of Lukoil Overseas and Mittal Investments, where each holds 50 per cent,” a Lukoil press release said. Lukoil used the unit, Caspian Investments Resources Ltd, to buy Kazakh oil producer Nelson Resources Ltd for $2 billion in 2005.
Caspian Investments will also hold a 25 per cent stake in Zhambay Llp, which is exploring offshore deposits in the Caspian Sea, Lukoil said in December. Lukoil’s president Vagit Alekperov said that the decision to sell the 50 per cent stake was linked to Mittal’s strong political connections in Kazakhstan. The alliance would increase Lukoil’s chances to acquire new assets in the region, Alekperov hoped.
Mittal Investments is the controlling shareholder of Arcelor Mittal, the world’s biggest steel company which is majority owned by the family of India-born Lakshmi Mittal. Kazakhstan is one of the 10 countries Mittal had originally identified for exclusive pursuit of hydrocarbon opportunities in joint venture (JV) with Oil and Natural Gas Corporation(ONGC). Some in ONGC see the acquisition as a violation of the pact unless Mittal transfers the stake to the joint venture firm, ONGC-Mittal Energy Ltd.
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