29.11.11 Caspian Focus Indian consortium breaks up as Kashagan saga rolls on

The travails of the Kashagan field continued this month as two major Indian firms announced that they would cancel their joint participation in an Indian consortium, citing very little value in return for “huge financial exposure”. Oil India and Indian Oil Corporation had joined to form a third partner for the consortium, which also comprises ONGC Videsh and Gas Authority of India (GAIL).

The consortium was formed to try to buy ExxonMobil's stake, even though the company has sought to quash speculation that it is thinking of selling up. Although ONGC and GAIL have said that they remain interested, flagging interest by the two other Indian firms is not an encouraging sign. In interviews this month with Bloomberg, senior executives involved in the project put off questions about the crucial and costly Phase Two, preferring to focus on Phase One – hardly trouble-free itself.

Azerbaijan's Socar had made some positive noises about buying up ExxonMobil's stake in June, but it would be a bold step for a company unversed in foreign production projects, especially one as complicated as Kashagan.

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