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India says bank abetted CNPC in oil-group bid

India has accused US investment bank Goldman Sachs of presiding over an auction for the Petro-Kazakhstan oil group which was marred by a "lack of propriety and transparency," the Financial Times reported yesterday.

In the report, Mani Shankar Aiyar, India's petroleum minister, said the rules were changed mid-way through the bidding for the Canadian-based company which helped China National Petroleum Corp (CNPC, 中國石油天然氣) win control of the group.

"The Indian bid was easily highest and the matter should have been closed," Aiyar was quoted as saying.

"I'm sick and tired at the lectures we are given by the West about the rules of the market, the sanctity of contracts and the need for correct procedures," he said.

Subject to approvals, CNPC won control of PetroKazakhstan in a US$4.18 billion deal from under the noses of India's state-controlled Oil and Natural Gas Corp (ONGC) and its partner, LN Mittal.

Bankers agree ONGC's initial bid of US$51 a share was higher than CNPC's US$50 but say CNPC was then granted a period of exclusivity because its deal was "deliverable," the newspaper said.

CNPC subsequently raised its offer to US$55 for the group which holds oil assets in the central Asian country.

Goldman Sachs said in the report: "We handled a fair and transparent auction."

For Aiyar's part, he said that "Goldman Sachs moved the goalposts while the bidding process was on but since PetroKazakhstan is incorporated in Canada, it's for the Canadians to ensure that actions on their soil are completely legal."

Meanwhile, CNPC signed a letter of intent over the weekend to sell a 33 percent stake in PetroKazakhsta to Kazakhstan's state-owned oil firm to secure its bid for PetroKazakhstan.

Kazakh officials threatened to block the deal and the country's parliament rushed through a law last week that would allow the state to intervene in a sale of strategic natural resources.

"In view of all the factors surrounding the PetroKazakhstan deal, we think it is in both parties' interest to reach a framework agreement as soon as possible, while putting aside our differences on asset valuation for later discussion." the CNPC official said.

Analysts say that the deal with the state-owned oil company, KazMunaiGaz, which has been under negotiations since last month, was a compromise to allow the Chinese purchase to proceed.
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