A CONSORTIUM of Indian public sector energy companies said they may join a bidding war for Africa-focused gas explorer Cove Energy, becoming the second Asian state-run group seeking to trump Shell’s $1.6 billion offer.
A last-minute offer from Oil and Natural Gas Corp and Gail India would pit them against Thai oil and gas group PTT and Royal Dutch Shell in a race for the London-listed company’s promising gas reserves in Mozambique.
“Given the potential of the asset, it would be a good acquisition,” said Manish Sonthalia, fund manager at Motilal Oswal AMC, who doubted funding would be a problem. “Shell is also bidding, so you have that much comfort on the asset and its potential.”
Shell had hoped to make a pre-emptive move for Cove’s prize among hot east Africa gas prospects by offering 195 pence per share for the company earlier this month, a 70 per cent premium to the share price when Cove put itself up for sale on January 5th.
But Thailand’s PTT beat that last Friday with a 220 pence bid, or $1.77 billion and, while analysts had doubts about the Indian firms’ prospects, their interest highlights a quickening scramble for natural resources for fast-growing Asian economies.
Cove’s main asset is an 8.5 percent stake in Mozambique’s Rovuma Offshore Area 1, where another operator Anadarko said recoverable reserves could top 30 trillion cubic feet of natural gas – equal to nearly half of Canada’s proved reserves. India’s Bharat Petroleum and Videocon Industries each own a 10 per cent stake in the Rovuma block.
Gail and ONGC Videsh, the overseas investment arm of India’s biggest oil and gas producer ONGC, said they had made no decision on whether to bid for Cove, or on any terms. The statement was in response to a report yesterday by the Times of India newspaper, citing sources familiar with the matter, that the consortium could make a combined bid this week valuing Cove at 245 pence a share.
Cove’s shares have surged since Shell’s offer on February 22nd, fuelled by anticipation of a bidding war. The shares, which rose 1.8 per cent yesterday to 239 pence, have more than doubled since the company’s January 5th announcement of a sale process. – (Bloomberg)
