By Cliff Feltham
Tuesday, 5 August 2008
Two of the world's most powerful state-run oil titans are locked in a tug of war for control of a UK exploration group based in Leeds and operating in Russia.
Shares in Imperial Energy rose steeply, valuing it at over £1.1bn, after it announced a bid approach which could lead to a cash offer. Experts say the mystery bidder is almost certainly the state controlled China Petroleum & Chemical Corporation (Sinopec).
Discussions are already underway with the Oil and National Gas Corporation of India (ONGC) which, like Sinopec, is desperate to acquire energy assets around the world to meet growing demand at home caused by the rapid pace of industrialisation.
The International Energy Agency estimates that Chinese demand will grow by 6 per cent this year and Indian demand by 5 per cent.
More players could still enter the battle. There were reports that the Korea National Oil Corporation is weighing up the prospects of a bid. The firm tried to buy Burren Energy last year but was outbid by Italy's Eni.
Imperial, formed in 2004 by executive chairman Pete Levine, 52, remains a tiddler in the global energy stakes. The group has a portfolio of oil and gas assets in western Siberia and Kazakhstan, but is currently producing only 10,000 barrels a day, although it plans to accelerate output to 80,000 by the end of 2011. However, recoverable reserves are estimated at 900 millionbarrels.
Imperial, a constituent company of the FTSE 250, has been watched closely by the major players. Last November Gazprom, the Russian gas export giant, made an approach to buy a quarter of the company, but talks floundered.
Imperial shares rose 86p to 1,160p yesterday, having been considerably higher earlier this year before rumours of Russian state intervention on the grounds of potential environmental damage unnerved investors.
In January, when the price peaked at 1,675p, Mr Levine raised £26m from the sale of 1.5 million shares, cutting his stake to 3.1 million or 6.1 per cent. Other key holders include Schroders with 10 per cent and Fidelity with 4.8 per cent.
Tim Heeley at the broker Daniel Stewart said any successful offer for Imperial would have to be pitched around the £15 mark while Cazenove considered it would need to be between £13 and £14.
However, the broker raised the intriguing possibility of Sinopec and ONGC getting together to launch a consortium bid "to avoid competing against each other".
Neither is it likely that the Russian government will stand in the way of intervention by either the Chinese or Indian groups taking over valuedassets within the country. The Russians have so far raised no objection to Indian investment in upstream assets, while Sinopec has already take two significant stakes in ventures within the country.
Tuesday, 5 August 2008
Two of the world's most powerful state-run oil titans are locked in a tug of war for control of a UK exploration group based in Leeds and operating in Russia.
Shares in Imperial Energy rose steeply, valuing it at over £1.1bn, after it announced a bid approach which could lead to a cash offer. Experts say the mystery bidder is almost certainly the state controlled China Petroleum & Chemical Corporation (Sinopec).
Discussions are already underway with the Oil and National Gas Corporation of India (ONGC) which, like Sinopec, is desperate to acquire energy assets around the world to meet growing demand at home caused by the rapid pace of industrialisation.
The International Energy Agency estimates that Chinese demand will grow by 6 per cent this year and Indian demand by 5 per cent.
More players could still enter the battle. There were reports that the Korea National Oil Corporation is weighing up the prospects of a bid. The firm tried to buy Burren Energy last year but was outbid by Italy's Eni.
Imperial, formed in 2004 by executive chairman Pete Levine, 52, remains a tiddler in the global energy stakes. The group has a portfolio of oil and gas assets in western Siberia and Kazakhstan, but is currently producing only 10,000 barrels a day, although it plans to accelerate output to 80,000 by the end of 2011. However, recoverable reserves are estimated at 900 millionbarrels.
Imperial, a constituent company of the FTSE 250, has been watched closely by the major players. Last November Gazprom, the Russian gas export giant, made an approach to buy a quarter of the company, but talks floundered.
Imperial shares rose 86p to 1,160p yesterday, having been considerably higher earlier this year before rumours of Russian state intervention on the grounds of potential environmental damage unnerved investors.
In January, when the price peaked at 1,675p, Mr Levine raised £26m from the sale of 1.5 million shares, cutting his stake to 3.1 million or 6.1 per cent. Other key holders include Schroders with 10 per cent and Fidelity with 4.8 per cent.
Tim Heeley at the broker Daniel Stewart said any successful offer for Imperial would have to be pitched around the £15 mark while Cazenove considered it would need to be between £13 and £14.
However, the broker raised the intriguing possibility of Sinopec and ONGC getting together to launch a consortium bid "to avoid competing against each other".
Neither is it likely that the Russian government will stand in the way of intervention by either the Chinese or Indian groups taking over valuedassets within the country. The Russians have so far raised no objection to Indian investment in upstream assets, while Sinopec has already take two significant stakes in ventures within the country.
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