New Delhi: Steel tycoon Lakshmi N Mittal may mave muscled acquisition of European giant Arcelor but his ambition to make it big in oil and gas sector is coming unstuck as his partner ONGC appears not keen on a venture the two giants had agreed last year.
Last week, Mittal wrote to the Government about delays in shaping up of ONGC-Mittal Energy Services Ltd (OMESL), a JV company that was to trade and ship oil and gas (including LNG), industry sources aid.
After the exit of high-profile Subir Raha, the idea of the coming together of India's largest oil and gas producer and world's largest steel maker ONGC, has reversed several decisions of the July, 2005 MoU.
Sources said ONGC has refused deputation of its employees to the ONGC-Mittal Energy Ltd (OMEL) -- the company formed to acquire oil and gas properties abroad and OMESL.
It has also reversed the decision to open an office in Delhi, soucres said adding the Indian firm this month cancelled interviews for recruitment of professionals to OMEL.
The Mittal letter pointed to delays on the part of ONGC to register oil companies with OMESL,a pre-requisite to begin trading in crude oil and petro products.
Frustrated at the delays, Mittal is beleived to have begun talking to global giants like Chevron, Exxon Mobil for an oil trading venture.
Soures said ONGC was willing to continue with OMEL but with a skeletal staff. On OMESL, the PSU' new management has privately said the oil-trading business does not form its core competence and would therefore prefer to exit from it.
A senior ONGC official said oil trading was an unrelated business activity and as such required parent company guarantees. "Extending parent company guarantees to an unrelated business is something the board will have to decide".
The two ventures with Mittal Steel were part of ONGC vision to become a 50 billion dollar company 2010.
Besides global footprint, the company had planned major downstream forays into oil refining, retailing ,petrochemicals and LNG business.
However, the downmstream projects have come under oil ministry scanner and a couple of them like fuel-retailing and new refineries at Mangalore and Kakinada have already faced the axe.
Sources said Mittal was frustrated at the delays in shaping of the ventures despite the phenomenal success OMEL has in acquiring two oil fields in Nigeria.
As a follow-up of July 23, 2005 MoU, ONGC Videsh Ltd, the overseas arm of ONGC, and Mittal Investment, the investment holding arm of Mittal Steel, in October 2005 signed definitive agreement to form OMEL.
ONGC and Mittal Investment joined hands to form OMESL for cooperation in trading and shipping of oil and gas.
OVL (in place of OMEL) and ONGC (in case of OMESL) were to hold 49.98 per cent equity and Mittal Investment 48.02 per cent. The balance 2 per cent was to be offered to SBI Caps.
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