Steel tycoon Lakshmi N Mittal's acquisition of 49 per cent stake in Hindustan Petroleum Corp's $3 billion Bhatinda refinery has violated his pact with Oil and Natural Gas Corp to pursue hydrocarbon opportunities exclusively with the flagship Indian firm, an ONGC official has said.
Though Mittal inked a joint venture agreement in July 2005 with the state-run firm to form ONGC-Mittal Energy for acquisition of oil and gas fields, refinery business and LNG projects, the steel czar recently decided to go it alone in investing Rs 3,300 crore (Rs 33 billion) in the Bhatinda refinery.
Besides, Mittal has on his own bought 50 per cent stake in a Kazakhstan oil firm from Russia's Lukoil for $980 million and acquired 3 per cent stake in the $6 billion Chevron-operated Olokola LNG (OK-LNG) project in Nigeria.
"The July 24, 2005 agreement had earmarked 27 countries for exclusive pursuit of hydrocarbon opportunities by OMEL. For the rest of the world, it clearly stated that Mittal shall offer ONGC Videsh a partnership in any venture or business opportunity it wishes to undertake in the hydrocarbon sphere," said the ONGC official, who did not want to be named.
But there was no such restriction placed on ONGC, he said, adding Nigeria and Kazakhstan fall under the 27 exclusive countries marked for OMEL.
Clause 2.4 of the 2005 agreement reads: "In the event Mittal or any of it affiliates is desirous of undertaking any venture or business opportunity in the hydrocarbons business in areas other than the Territories (27 countries), Mittal shall invite OVL, to the extent permissible and in the manner and with such information about such venture or business opportunity as it deems fit, to participate in such venture or business opportunity together with Mittal."