ONGC to buy Conoco for $5 bln

Indian state-run energy giant ONGC agreed on Monday to buy ConocoPhillips\' 8.4-percent stake in a Kazakhstan oil field for $5 billion as it seeks fuel to feed the South Asian nation\'s growing economy. The purchase of the stake in one of the world\'s biggest oil finds in four decades, still subject to various government and corporate approvals, would mark the biggest-ever foreign acquisition by India\'s Oil and Natural Gas Corp (ONGC). Texas-based ConocoPhillips said early in 2012 it was aiming to sell non-core assets as part of a restructuring drive while fuel-import dependent India has been scouring the globe to lock in fuel supplies for its expanding economy. \"The sale of this quality asset is an important component of our ongoing strategic asset disposition program,\" said Don Wallette, a senior ConocoPhillips executive, said in a statement. \"We are pleased that ONGC Videsh recognises the value of this asset,\" said Wallette, vice president of the US oil and gas major\'s corporate planning referring to the firm\'s overseas arm. The proceeds from ConocoPhillips\' sale of its 8.4-percent stake in the vast Kashagan field in Kazakhstan would be $5 billion, ConocoPhilips said. The deal is slated to close in the first half of 2013. The purchase of the Kashagan field in the Caspian Sea would surpass the value of ONGC\'s $2.2-billion buyout of Russia-focused Imperial Energy in 2009. ONGC will be taking on a tough challenge in buying a stake in the central Asian field that has been dogged by spiralling costs and extensive delays. The field is expected to come on stream in early 2013 after being targeted to start production in 2005. Development has been made difficult by the icy, hostile climate, demanding technical conditions and disputes with the Kazakhstan government. \"The acquisition would mark OVL\'s entry into the largest oil proven North Caspian Sea of Kazakhstan,\" OVL said in a statement late on Monday. The Kashagan field will have an initial capacity of 370,000 barrels a day. Kashagan, one of the world\'s last so-called \"elephant fields\", holds an estimated 30 billion barrels of oil of which eight to 12 billion barrels are believed to be recoverable. The ONGC\'s purchase is subject to the approval of the governments of Kazakhstan and India and other partners in the field waiving pre-emption rights. Italy\'s Eni, Royal Dutch Shell, France\'s Total, ExxonMobil and KazMunayGas have 16.81 percent stakes each while Inpex of Japan holds the remaining 7.56 percent. ConocoPhillips is selling the field, which had a value of $5.5 billion in its books, at a loss. The US company, which has been selling assets to reduce debt and swell its exploration budget, said its disposal drive has yielded $2.1 billion so far. The sale of the Kashagan field would push that sum to $7 billion \"and strongly position the company to accomplish its target of $8-$10 billion by the end of 2013,\" ConocoPhillips said.