Mittal-ONGC oil & gas JV runs out of steam

Mittal-ONGC oil & gas JV runs out of steam
Agencies Posted online: Friday , October 12, 2007 at 1434 hrs IST

New Delhi, October 12: Steel czar Lakshmi N Mittal's joint venture with state-run ONGC for oil and gas trading has all but folded-up, with the India born billionaire absorbing the remaining two employees including the CEO into his group.

S K Sharma, the CEO of ONGC-Mittal Energy Services Ltd, along with the only other employee at OMESL, is joining the Mittal Investment Sarl, the Luxembourg-registered holding company of Mittal family, industry sources said.

OMESL, one of the two joint venture company Mittal had formed with ONGC in July 2005, is also shutting its Delhi office. "The company will only exist in paper," a source said.

Mittal had never been happy with the progress at OMESL.

Apparently, ONGC, after the exit of flamboyant Chairman and Managing Director Subir Raha, was not keen on trading and shipping of oil and gas (including LNG).

The state-run firm had not even contributed its share of capital and the company survived all this while only on Mittal's contribution.

In June last year, a government director on the board of ONGC blocked the exploration firm's equity participation in OMESL as the ministry did not want the state-run firm to make huge financial outlays for non-core trading business.

Frustrated at the delays, Mittal first wrote to the Petroleum Ministry about the delays in shaping up of OMESL and later signed a preliminary pact with Total of France for cooperation in oil and gas business including trading.

Mittal Investment on its own has already taken 49 per cent stake in HPCL's Bhatinda refinery and Russian oil firm Lukoil's 50 per cent stake in Caspian Investments Resources for 980 million dollars.