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O/T - ONGC, Sinopec buy oil stake in Colombia

Oil & Natural Gas Corp (ONGC), India’s largest explorer, bought an oil area in Colombia jointly with a unit of China Petrochemical Corp (Sinopec), the nation’s second-biggest oil company.

ONGC and Sinopec Group will set up an equally-owned company to acquire Omimex de Colombia Ltd, the ONGC said in a statement to the Bombay Stock Exchange (BSE) Ltd. India and China are seeking oil assets in countries such as Kazakhstan, Iran and Ecuador to secure energy supplies for two of the world’s fastest-growing major economies.

The Asian nations need to acquire assets because they face stagnant domestic oil production as their fields age. Growing imports by the two countries have made crude oil prices rise to a record.

ONGC Videsh Ltd, the overseas unit of ONGC, got the Cabinet’s permission on August 3 to bid for oil assets in Colombia, finance minister P Chidambaram said. “ONGC Videsh has been permitted to go ahead with the acquisition,” Chidambaram said. “ONGC Videsh will fund from its own resources, or its parent organisation’s.” The two companies will pay more than $800 million for the stake, The Financial Express reported on August 14, citing people it did not identify.

Omimex de Colombia, a unit of Texas-based Omimex Resources Inc, has proven reserves of more than 300 million barrels of oil and has a production of about 20,000 barrels a day. ONGC Videsh was advised by UBS AG, the Sinopec Group by Citigroup Inc, a statement issued by the Indian explorer said.

Calls made to China Petrochemical’s spokesperson Zhang Zheng and Sinopec International Petroleum Exploration and Production Corp were not answered.

http://www.financialexpress.com/fe_full_story.php?content_id=141169c