ONGC snubs Goldman with facts on overseas growth

State-owned giant Oil and Natural Gas Corporation (ONGC (ONGC.NS : 1165.15 -9)) has said that it has acquired 43 overseas oil and gas assets in the last six years, countering with hard facts questions raised by investment analysts at Goldman Sachs over the strength of its international operations.

"From just one property in 2003, ONGC's overseas oil and gas properties have grown to 44 in 2009," ONGC said in a statement released on Sunday in response to criticism by the investment bank that ONGC's overseas growth strategy "has not been effective."

The company said it has added 255 million tonne oil equivalent (MTOE) of reserves through acquisition of overseas properties since 2003-04.

GS had also raised corporate governance issues in ONGC's working. GS says the government, as promoter of ONGC, had taken $20 billion in cash from the company over last six years without consulting minority shareholders.

Commenting on corporate governance issues raised by GS, ONGC's statement said, "Subsidy discounts to public sector oil marketing companies is a practice of the government since 2003-04."

"Moreover, these discounts are applicable to crude produced from blocks awarded to ONGC by the government on nomination basis. The government is the actual owner of these blocks," it said.

Incidentally, this is not for the first time that the US investment bank has had a run-in with the state-owned firm.

In 2005, the then Petroleum Minister Mani Shankar Aiyar had accused Goldman of "lack of propriety and transparency" in presiding over the auction of a Kazakhstan oil firm.

Aiyar had alleged that ONGC and its billionaire partner Lakshmi N Mittal's $3.98 billion bid was the highest when the bids for PetroKazakhstan closed on August 19, 2005. But Goldman allowed China National Petroleum Corp (CNPC) to revise its bid to $4.18 billion in the following days and the sale was announced before office hours on August 22.

Goldman did not allow ONGC-Mittal to revise its bid for PetroKazakhstan, he had alleged then.