British Gas acquisition overtaken by events

Vol 5, PW 22 (19 Dec 01) People & Policy
     

Caught between is British Gas, whose valiant effort to acquire Enron's 30% stake in Panna, Mukta and Tapti is fast resembling an irrelevant sideshow.

Unclear is if British Gas is still interested. On 29th November, just four days before Enron filed for ' Chapter 11', David McManus, a company VP, gave ONGC chairman Subir Raha perhaps the most generous offer BG will ever make.

McManus tells Raha BG is ready to settle an outstanding joint venture cash call by returning to ONGC $1.2m held in escrow and promises to pay ONGC a further $8.4m after acquiring EOGIL. He also reiterates BG's commitment to help ONGC with its deepwater programme and to provide managerial and operational secondments for ONGC personnel.

But in return he wants ONGC to waive its right to seek the removal of EOGIL as operator following the change of control. Sadly for ONGC, BG held this offer open until 30th November only, citing fast moving developments in the US.

Three days earlier ONGC's board met to discuss the McManus offer, but rejected it. Until 30th November BG was clearly serious about acquiring EOGIL.

Frank Chapman, company CEO, even met oil minister Ram Naik on 29th November to plead its case and to bring "the matter to a successful and rapid conclusion." But 6,000 miles away in Houston things were taking a different turn. On 2nd December Enron collapsed; BG's communication has since stopped.