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A trio of state-run Indian oil companies has bid $5 billion for stakes in Canadian oil sands holdings owned by ConocoPhillips
The bid from the group, which comprises producers Oil and Natural Gas Corp
It comes as India, which imports about 80 percent of its near 4 million barrels per day (bpd) oil needs, cuts purchases from major supplier Iran to secure a waiver from U.S. sanctions aimed at curbing Tehran's nuclear ambitions.
"We have bid along with Oil India and Indian Oil Corp," a source at ONGC Videsh, the overseas investment arm of ONGC, told reporters on Monday. A source at Oil India said the bid was submitted at the end of July.
In January, ConocoPhillips put stakes in six Alberta properties on the auction block. They produce 12,000 barrels of oil a day from an estimated 30 billion barrels of bitumen.
The one producing project in the package is Surmont, run in a joint venture with France's Total SA
ConocoPhillips declined to comment on the bid from the Indian firms, the timing for announcing the results of the auction, or the overall level of interest. "We do not comment on market rumours," spokeswoman Davy Kong said.
ONGC Chairman Sudhir Vasudeva said on Tuesday the company had not yet made a bid but continued to look at international opportunities.
LESS THAN FRUITFUL SEARCH
The New Delhi government has told state firms to secure energy assets overseas as the country's own output is well below the needs of its demand in an economy expected to grow 6.5 percent this year and already suffering hefty power shortfalls.
But attempts to secure assets have not been very fruitful, even though there is ample cash available.
International Coal Ventures Limited (ICVL), a consortium of state-run companies including Steel Authority of India
Its poor M&A track record mainly stems from bureaucratic sloth as well as differences among the consortium members over ownership issues, said several banking sources who have previously worked with the state-run companies.
"In any well-run auction process, Indian state-run companies will be at a disadvantage because they are not very efficient and don't move fast enough," said a resources M&A banker with a European bank in Mumbai.
"When you are a consortium of state-run firms, the entire process becomes very chaotic," he said. "But energy security is a big theme for India and one good thing is there are not too many buyers for these assets due to global economic conditions."
In February, ONGC and state-run gas transportation company GAIL India Ltd
On their own, Indian energy companies have likewise had little success in closing large overseas acquisitions and tended to focus on individual deals.
ONGC Videsh, which is expected to contribute about 46 percent of group production by financial year 2030 with investment of $20 billion, has stakes in 30 projects in 15 countries including producing assets in Sudan, South Sudan, Vietnam, Syria, Russia, Colombia, Venezuela and Brazil.
It recently bought a 2.7 percent stake of Hess
Foreign state-owned firms are increasingly looking at Canada's tar sands, the world's third-largest crude source. The Indian interest follows a $15.1 billion bid for Calgary-based Nexen Inc
The other properties in the ConocoPhillips package are assets known as Thornbury, Clyden, Saleski, Crow Lake, McMillan Lake. The land totals 715,000 acres.