SK Sharma quits Mittals to join Glencore

NEW DELHI: S K Sharma, one of the two high profile officers steel czar Lakshmi N Mittal had hired for his ventures with state-run Oil and Natural Gas Corp, has quit Mittal Investment Sarl to join trading house Glencore.
    
Mittal had hired Sharma, a BPCL executive, in October 2005 to head his oil and gas trading venture ONGC-Mittal Energy Services Ltd. In October last year, Sharma was moved to Mittal Investment Sarl after almost winding up OMESL as ONGC showed little interest in the venture.
    
Sharma earlier this month quit Mittal Investment Sarl, the Luxembourg-registered holding company of Mittal family, to join Glencore, industry sources said.
    
Naresh K Nayyar, the Indian Oil Corp executive who was hired to head ONGC-Mittal Energy Ltd (the joint venture for acquisition of oil and gas properties), has already quit and joined Essar Oil.
    
In place of Nayyar, V Ravindranath, who retired as executive director from ONGC, was appointed as CEO of OMEL which now is left with only four employees. Mittal has already moved the CFO of the company to one of his ventures in Kazakhstan.
    
ONGC and Mittal had in July 2005 come together to form OMEL and OMESL. While OMEL picked up a handful of exploration blocks, OMESL existed only on paper.
    
Sources said Mittal had never been happy with the progress at OMESL. Apparently, ONGC, after the exit of flamboyant Chairman and Managing Director Subir Raha, was not keen on trading and shipping of oil and gas (including LNG).     

The state-run firm had not even contributed its share of capital and the company survived all this while only on Mittal's contribution.

Sources said OMESL was folded up because it could not get business anywhere. OMESL offered to export petroleum products from Mangalore Refinery, a subsidiary of ONGC, directly to customers but was merely registered to receive MRPL tenders.
    
Other state-run firms like Indian Oil, however, refused to even register OMESL citing lack of experience.
    
When ONGC and Mittal came together to form OMESL, the company was to initially quote only for naphtha/fuel oil export tenders of ONGC and crude import and petroleum product export tenders of Mangalore Refinery and Petrochemicals Ltd.
    
Subsequently, it was to register with other refiners like IOC, Bharat Petroleum and Hindustan Petroleum.
    
OMESL was also to be used as a vehicle for trading of oil and gas produced by OMEL, the other joint venture between ONGC and Mittal for buying oil properties abroad. Sources said ONGC was willing to continue with OMEL, but with a skeletal staff.
    
The two ventures with Mittal were part of an ONGC vision to become a USD 50-billion company by 2010. Besides a global footprint, the company had planned downstream forays into oil refining, retailing, petrochemicals and LNG business.
    
However, the downstream projects have come under the Oil ministry scanner and a couple of them like fuel-retailing and refinery foray have already faced the axe.
    
In June 2006, a government director on the board of ONGC blocked the exploration firm's equity participation in OMESL as the ministry did not want the state-run firm to make huge financial outlays for non-core trading business.
    
Frustrated at the delays, Mittal first wrote to the Oil Ministry about the delays in shaping up of OMESL and later signed a preliminary pact with Total of France for cooperation in oil and gas business including trading.
    
Mittal Investment on its own has already taken 49 per cent stake in HPCL's Bhatinda refinery and Russian oil firm Lukoil's 50 per cent stake in Caspian Investments Resources for USD 980 million.