India Bets on Troubled Kashagan to Restart Oil Expansion

Image

Photographer: Nariman Gizitdinov/Bloomberg

India’s largest oil explorer is attempting to revive a stalled overseas expansion plan by buying into a $46 billion project that’s eight years behind schedule and cost twice as much as expected.

Oil & Natural Gas Corp. (ONGC) announced the company’s biggest overseas acquisition yesterday, the $5 billion purchase of ConocoPhillips (COP)’s 8.4 percent stake in Kazakhstan’s Kashagan project. Touted as the biggest find since the 1960s when it was discovered in 2000, the field beneath the Caspian Sea is expected to produce 370,000 barrels a day from next year.

For ONGC, as the state-controlled producer is known, the deal signals an acceleration in overseas acquisitions as the New Delhi-based producer spends 11 trillion rupees ($198 billion) by 2030 to increase production at home and abroad. Deals slowed after completing the $2.2 billion purchase in 2009 of Imperial Energy Corp., a U.K. company with fields in Siberia where production started to decline quickly.

“The worst for the Kashagan field, including the delays, is behind everyone,” D.K. Sarraf, managing director of ONGC Videsh Ltd., the company’s overseas unit, said in an interview. “The future of this really large field is good. We’re fully prepared to participate in the field, including expansion.”

ONGC fell 0.1 percent to 249.75 rupees at the close in Mumbai. It rose as much as 1.6 percent earlier. The shares have declined 2.7 percent this year, compared with a 22 percent gain in the benchmark Sensitive Index. (SENSEX)

First Refusal

The Kazakh government and project partners including Exxon Mobil Corp. (XOM) and Eni (ENI) SpA have the right of first refusal on the sale, according to yesterday’s statement. The Central Asian nation will consider buying Conoco’s stake and has two months to decide, Oil and Gas Minister Sauat Mynbayev said in the capital, Astana, today.

After completing the first phase of the project, the Kazakh government and partners in Kashagan must decide on whether to expand the project to 1 million barrels a day, a commitment that would cost tens of billions of dollars. Drilling at the field is complicated by winter temperatures that freeze the Caspian and an oil reservoir that contains lethal gas.

“Fields of Kashagan’s size are always a challenge and ONGC’s experience from Imperial hasn’t been the best, so hopefully they’ve learnt from that,” said Kamlesh Kotak, Mumbai-based vice president of research at brokerage firm Asian Markets Securities Pvt. “Running the field at full potential is going to be a challenge. Having been beaten by the Chinese in the past, ONGC has to do all it can to get what it can now.”

Largest Field

In September, ONGC agreed to spend $1 billion to buyHess Corp. (HES)’s 2.7 percent stake in Azerbaijan’s largest oil field and an associated pipeline. BP Plc, the operator of the Azeri- Chirag-Guneshli fields, has been criticized by the Azeri government for a faster-than-expected decline in production.

ONGC scrapped a plan to revive production from Imperial’s fields just months after completing the purchase of the company because the fields didn’t perform as expected. The Indian company this year backed away from buying a 25 percent stake in a second Russian producer, OAO Bashneft, because they couldn’t agree on a price.

“One wrong experience with Imperial should not stop ONGC from sourcing other deals, provided utmost care is taken,” said Niraj Mansingka, a Mumbai-based analyst with Edelweiss Securities Ltd. “Their cash flow is positive, hardly any debt and they plan to raise production overseas to meet India’s energy demand.”

China Versus India

China has been more aggressive than India in pursuing overseas oil and gas acquisitions as the world’s most populous nations look for oil fields to meet soaring energy demand.

China’s Cnooc Ltd. (883) offered $17 billion for Canada’s Nexen Inc. this year. China Petrochemical Corp. bought Addax Petroleum, based in Canada and focused on Africa and the Middle East, in 2009 for $8.9 billion. By contrast, India’s biggest prize before yesterday’s deal was Imperial Energy.

ONGC produced 8.75 million tons (about 175,000 barrels a day) overseas in the year ended in March. The company wants to produce 60 million tons by 2030 by investing in fields outside India.

India consumed 3.5 million barrels of oil a day in 2011, up 3.9 percent from the previous year, according to BP Plc (BP/)’s Statistical Review of World Energy. Only the U.S., Japan and China consumed more.

First Half

ConocoPhillips and ONGC Videsh expect to close the deal for a stake in the North Caspian Sea Production Sharing Agreement in the first half of next year, according to a statement yesterday.

North Caspian Sea Operating Co. operates Kashagan. The partners include Eni, Exxon Mobil, KazMunaiGaz, Shell and Total SA (FP), each with 16.8 percent, according to ConocoPhillips’ website. Japan’s Inpex Corp. (1605) has 7.6 percent.

BG Group Plc agreed in 2003 to sell its 16.7 percent stake in the project to China Petrochemical Group and Cnooc for $1.23 billion. Total, Exxon, Shell, Conoco, Eni and Kazakhstan’s national oil company countered that agreement by exercising rights to buy the holding on a pro-rata basis. That deal was completed in 2005.

The budget for the first phase may almost double to $46 billion by the time oil is exported, a person with knowledge of the matter said in January. An early cost estimate put the tab at about $24 billion and the first production was originally expected in 2004.

Advertisements

Russians become interested in Kazakhstan’s resources

Russian issuers are considering a public flotation not as a way to raise money, but as a method of getting market valuation of businesses and advancing them to a new level.

Russian participants of the stock market in Kazakhstan are interested in resources, kapital.kz reports citing the Eurasian Development Bank. Kazakh financial institutions are interested in the Russian market, primarily, as a mechanism to attract financial resources. Russian businesses, in turn, consider Kazakhstan’s market as a ‘bridge’ that allows access to the extraction and exploitation of natural resources of Kazakhstan. While a significant part of polled Kazakh organizations are interested in floating their securities on the Russian market, Russian companies are not willing to do so for the time being.

Article sourced from Kazakh.TV

Channel 31 and The Walt Disney Company CIS to Show Best Movies and Series to Viewers in Kazakhstan

Russia’s leading independent media company, and The Walt Disney Company CIS have announced the signing of a new two-year agreement to broadcast the films and animated content of The Walt Disney Company CIS (“Disney”) via Channel 31, one of the largest players on the television market in Kazakhstan.

The agreement marks yet another step in the continuation of the successful cooperation between the two companies, which began in 2008. Under the terms of the agreement, Channel 31 receives the rights to broadcast 140 Disney movies and full-length animation titles, around 20 animated series and children’s video game TV shows, as well as the latest “Funniest Home Videos” episodes. The deal also includes the following ABC television series: “Revenge”, “Once Upon A Time”, “The River” and “Missing”.

Bagdat Kodzhakhmetov, Head of Channel 31: “Disney is our long-standing strategic partner and the first major entertainment provider with whom Channel 31 has signed a sizeable agreement. We have been cooperating for more than four years now, during which the Disney content has consistently held top positions in our ratings. We even had “Disney Days” during the New Year and Christmas holidays, which drew in huge audiences, and our viewers can also look forward to such animated films and movies as “The Lion King”, “Cars”, “Brave”, “The Avengers” as well as “The Chronicles of Narnia”, “Pirates of the Caribbean” movie series in weekend slots.”

Sergey Petrov, Chief Broadcasting Officer of CTC Media: “Channel 31 has grown significantly and further consolidated its market position in recent years. One of the main factors contributing to this success is the cooperation with leading world players such as The Walt Disney Company. Competition on the Kazakh market is intense at the moment, and we must broadcast high-quality content to keep the attention of our viewers. Without a doubt, Disney content satisfies even the most discerning viewer.”

Marina Zhigalova-Ozkan, CEO of The Walt Disney Company CIS: “The television market in Kazakhstan is developing rapidly, and we are striving to be in sync with the new trends. We are very glad that our agreement with Channel 31 will allow us to share the very best content created over many years with viewers in Kazakhstan.”

About CTC Media

CTC Media is a leading independent media company in Russia, with operations throughout Russia and in a number of other CIS markets. It operates three free-to-air television networks in Russia – CTC, Domashny and Peretz – as well as Channel 31 in Kazakhstan and a TV company in Moldova, with a combined potential audience of over 150 million people. The international pay-TV version of the CTC channel is available in North America, Europe, North Africa, the Middle East, Central and South East Asia. CTC Media also has its own TV content production capabilities through its Story First Production subsidiary. The Company’s common stock is traded on the NASDAQ Global Select Market under the symbol “CTCM”. For more information about CTC Media, please visit http://www.ctcmedia.ru

The CTC Media, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=9587

About Channel 31

Based in Almaty, Kazakhstan’s Channel 31 was launched in April 1992. On March 31, 2008, the network and content of Channel 31 were re-launched under a new entertainment format: Channel 31 and CTC Media concluded an agreement in 2008 to create a new holding – the Channel 31 group of companies. The Channel 31 network currently comprises its own documentary and entertainment programs, Hollywood blockbusters, as well as TV series and shows from some of the most popular production companies around the world. More detailed information about Channel 31 can be found here: http://www.31.kz.

About Disney in Russia

The Walt Disney Company CIS, a subsidiary of The Walt Disney Company, was founded in April 2006. Marina Zhigalova-Ozkan is the CEO of The Walt Disney Company CIS. In Russia and the CIS, the company’s business activities include: film production and distribution, stage productions, licensed DVD and Blu-ray™ sales, the production and distribution of TV content, the Disney channel, consumer product licensing – clothes, toys, children’s products, stationary, food products, cosmetics etc., licensing publications – book and children’s magazines, the production and distribution of mobile and internet content, computer and console game development and distribution, as well as producing and publishing social networking games. More information about the company can be found at http://www.disney.ru and http://www.waltdisney.ru.

About Disney globally

The Walt Disney Company (TWDC) (NYSE:DIS), a world leader in the entertainment industry, was founded by Walt Disney in 1923. Disney is one of the top ten most valuable brands in the world. The company’s revenue amounted to U.S. $40.8 billion in 2011. TWDC operates in 172 countries and has 1,300 radio and TV stations, broadcasting in 53 languages.

TWDC is one of the world’s largest licensors and the largest publishers of children’s literature. Disney is the leading distributor of video, DVD and Blu-ray™ content in Europe and Latin America. TWDC’s content archive comprises over 3,000 films. TWDC owns a variety of companies including Pixar, Marvel, ABC-International Television, ESPN, TouchStone and others.

Article sourced from Stockhouse

Polymetal Loses Battle Over Kazakhstan Corporation Tax

Russian mining company Polymetal International has lost its battle with the Kazakhstan authorities and will now face a USD14m corporation tax bill together with an additional fine which will increase the total amount due to approximately USD19m.

In a statement Polymetal said: “On November 5th, 2012 the Kostanay regional court (Kazakhstan) issued a ruling on the tax dispute between JSC Varvarinskoye, a subsidiary of the Group, and the Kazakh tax authorities. Additional corporate profit tax of approximately USD14m has been charged to JSC Varvarinskoye.”

“An additional fine will be charged at the maximum amount of 50% of the initial amount which will increase the total amount to be paid to approximately USD19m.”

According to Polymetal, the dispute “reflected varying opinions of the Group and the tax authorities” on the tax deductibility of non-cash foreign exchange losses and of transportation, treatment and refining charges. Polymetal says that it is reviewing its legal options and may challenge the tax authority’s decision.

Polymetal warned that it has not set aside any provision for the fine in its financial statements for the period up to June 30, 2012, and that the fine will be incorporated into financial statements for FY2012.

Article sourced from Tax-News

Astana to host Belarusian-Kazakhstan business forum 9 November

The second Belarusian-Kazakhstan Business Forum will be held in Astana on 9 November, spokesperson for the Foreign Ministry Andrei Savinykh told journalists.

“Prime Ministers of Belarus and Kazakhstan are expected to attend the plenary meeting of the forum. A business matchmaking session will be held as part of the business forum,” said Andrei Savinykh.

He also said that on 9 November Astana will play host to a meeting of the Belarus-Kazakhstan intergovernmental commission for trade and economic cooperation. The Belarusian delegation is headed by Deputy Prime Minister Mikhail Rusy, the Kazakh one by Emergencies Minister Vladimir Bozhko. “During the meeting the parties will consider the joint action program for economic cooperation between the Republic of Kazakhstan and the Republic of Belarus,” said the spokesman.

The meeting participants will discuss promising cooperation areas in 2013. “The meeting will focus on cooperation in the manufacturing, agricultural and energy sectors, transport and logistics. Particular emphasis will be placed on the development of interregional and technical and scientific cooperation,” Andrei Savinykh. Attending the meeting will be representatives of the business communities of Belarus and Kazakhstan.

Article sourced from Belarusian Telegraph Agency