India has second thoughts on U.K.'s Imperial Energy.
The offer by India's state-owned Oil and Natural Gas Corp. to buy British exploration firm Imperial Energy was only just approved by anti-trust groups and now India is reconsidering, the Economic Times reported.
The bid is the largest so far this year in India at $2.8 billion, but as the global economy continues to head toward recession and the price of oil hovers just above $60 per barrel, the value of Imperial has fallen to $1.7 billion.
"Petroleum Minister Murli Deora has asked his colleagues, including the finance minister, whether the ONGC bid in the present condition is expensive," a government spokesman said.
The spokesmen told the Economic Times that ONGC hopes to renegotiate with Imperial, especially since Imperial's stock has dropped and crude oil prices have decreased by more than 50 percent since the first offer was made.
The merger, which would allow ONGC to develop Imperial's assets in Russia and Siberia, was approved recently by Russia's Natural Resources Ministry. At the time it was also in a competitive bid with China's state-owned Sinopec, so ONGC does not want to just walk away, but the investment as it stands now would not be worth what it was originally.
Falling oil prices provide false hope.
The more than 50 percent drop in the price of oil since July has provided relief to governments, bankers and pained citizens, but the fix is only temporary, The Telegraph reported.
In addition to falling oil prices, the United States Federal Reserve cut its interest rates to try to stop the bleeding economy, and analyst group Wood Mackenzie forecast that global oil demand will fall next year for the first time since 1983 -- but in reality, it is only the rate of demand that will slow.
Countries with rapidly growing economies and populations, such as China and India, now represent almost half of total world crude demand after increasing about 5 percent last year.
Even if those economies slow, there will still be millions of newly rich consumers looking to buy energy-intensive products like cars and air-conditioners and eating more meat, which takes more oil to produce and transport.
Malaysia approves Sabah-Sarawak pipeline.
Construction of the $369 million, 500-kilometer gas pipeline between the Malaysian states of Sabah and Sarawak will begin now that the Malaysian government has given its final approval, The New Strait Times reported.
The cabinet decided Sunday that Petronas, which is undertaking the project, must ensure it works to develop Sabah's petrochemical industry as part of the condition of approval for the pipeline to be established there.
Minister Tan Sri Bernard Dompok originally asked the federal government to scrap the project if there were no extra benefit to Sabah.
The government's goal is to diversify Sabah's economy and increase its gas and oil reserves.
Sabah's current reserves of natural gas are estimated at about 7.5 trillion cubic feet, and it is one of only three oil-producing states in the country, though the industry is still budding.
"The simultaneous construction of the petrochemical plant and the gas pipeline will definitely help Sabah, which has been left behind in the development of the oil and gas industry," Dompok said.
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Closing oil prices, Nov. 10, 3 p.m., London
Brent Crude oil: $57.55
West Texas Intermediate crude oil: $61.46
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