The LN Mittal group is likely to pull out of the oil and gas exploration projects that are being developed jointly with Oil and Natural Gas Corporation Ltd. or ONGC in Trinidad, Tobago as also in Kazakhstan, because of global meltdown and sharp drop in oil prices, media reports said.

The Mittal group, which owns world' largest steel company ArcelorMittal, and India's state-owned oil and gas major ONGC were jointly developing the two projects, NCMA-2 block in Trinidad and Tobago and Satpayev block in Kazakhstan, under their joint venture ONGC Mittal Energy Ltd. (OMEL).

Mittal Investments confirming the exit from at least one of the blocks reportedly said the group has carried out a thorough analysis of the Trinidad project, considering the impact on the oil and gas industry due to the current economic situation. Therefore, Mittal group has decided not to go ahead at this point in time.

OMEL holds 65% interest in NCMA-2, an offshore exploration block located at the northern margin of Trinidad and Tobago, while Trinidad and Tobago's national oil company Petrotrin holds the balance 35%. In 2007, OMEL bagged NCMA-2 block that has estimated reserves of 2 trillion cubic feet of natural gas.

R.S. Sharma, ONGC Chairman and Managing Director is hopeful of rescuing the project and ONGC and Mittal group are working out some solutions. The Mittals said the promoters (OMEL) have not yet made the final decision.

The company said low return on investments due to a slump in global oil prices was the main reason for considering a pull out and not financial constrain, but returns have changed as oil prices have halved.

Even as the Caribbean project look uncertain, ONGC will go ahead with the Satpayev block in Kazakhstan, for which ONGC requires additional funds. The Mittals expressed a similar view. The Satpayev block in Kazakhstan is under progress after the memorandum of understanding inked signed in New Delhi recently.

The Satpayev block, in the pre-Caspian basin of Kazakhstan in Caspian Sea, is situated in a highly prospective region near major fields like Karazhanbas, Karakas, Lasagna and Donga, where major oil discoveries have been made.

While ONGC was instrumental in getting the Satpayev block, Mittal was the main force behind Trinidad deal. The two partners are also carrying out exploration and production ventures in Nigeria and Turkmenistan under OMEL banner.

ONGC and Mittals' investment arm, Mittal Investment SARL, formed OMEL in 2005. ONGC holds about 49.98% stake in the JV and Mittal Investment holds 48.02%. The balance stake is held by SBI Caps.

At the BSE, ONGC shares are currently trading at Rs.843.00, down by Rs.42.75 or 4.83% on a volume of around 50K shares. The company's scrip touched an intraday high of Rs.870.00 and an intraday low of Rs.837.00.

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