BEIJING - Chinese
petroleum giant CNPC's winning of a bid over
India's ONGC to acquire PetroKazakhstan Inc was
termed as a "victory" by the Chinese state media
August 23, while Indian analysts said the
"avoidable" competition for oil resources between
the Asian giants would cost the country dearly.
"It marks a victory for China in its
rivalry with India, another of the world's most
populous and energy-hungry nations, for overseas
oil and gas reserves," the state-run China Daily
said in a front-paged report. However, analysts
pointed out that it was the Chinese government and
the Chinese people who will have to shell out
US$580 million more for acquiring PetroKazakhstan,
the Central Asian nation's third largest oil
producer, after CNPC was allowed to re-bid,
increasing the price by that amount.
"This [competition] could
have been avoided if the Chinese side had
discussed this issue with us," an official Indian
source pointed out, referring to the first-ever
India-China dialogue on hydrocarbons held in
Beijing on August 9. Additional Secretary for
International Cooperation in the Ministry of
Petroleum and Natural Gas, Talmiz Ahmad, had led a
high-level Indian delegation for the India-China
dialogue on hydrocarbons. One of the aims of the
India-China dialogue was to avoid competition
between the two fastest-growing countries in their
global race to acquire oil and gas interests in
third countries, which is detrimental to the
interests of both countries, he noted.
India's counter-offer
obstacles India's plans to make a
counter-offer for PetroKazakhstan might be riddled
with impediments, as the Central Asian oil firm
would have to shell out $125 million in penalty if
it rejects the $4.18 billion offer by China's
CNPC. India's OME consortium, which had quoted a
higher price for PetroKazakhstan than China
National Petroleum Corp when bids closed on August
15, is mulling making a counter-offer in the wake
of the Chinese firm being allowed to revise its
bid to $4.18 billion, industry sources said. ONGC,
which had bid for Kazakhstan's third largest oil
producer jointly with the world's largest steel
maker, MittalGroup, in the form of the OME
consortium, was not given an opportunity to better
its $3.9-4 billion bid.
Also, CNPC's deal
with PetroKazakhstan, owned by a Canadian company,
prohibits it from soliciting new offers (like a
revised bid from OME). But it would also have to
consider any competing bid and recommend it to
shareholders if deemed better for them, sources
said. PetroKazakhstan's board of directors had
Tuesday recommended that its shareholders accept
CNPC's $55 a share takeover offer.
The
transaction is subject to the approval of 66.67%
of the votes cast by PetroKazakhstan shareholders
at a meeting of shareholders expected to be held
in October. Should PetroKazakhstan decide to
accept and recommend other takeover proposals, it
would have to pay a termination fee of $125
million. CNPC will also have the right to match
any superior proposals, sources said.
