The Indian Economy Blog

August 23, 2005

The Winner’s Curse

Filed under: Business,Energy — Blue Sky @ 2:38 pm

China outbid India to acquire PetroKazakhstan Inc, Kazakhstan’s third largest oil producer, after its flagship company CNCP raised its offer higher than the Indian price.

China National Petroleum Corp, which trailed Oil and Natural Gas-Mittal Group combine when price bids were made on August 15, raised its bid to $4.18-billion to acquire PetroKazakhstan, a Canadian oil firm operating in Central Asia. ONGC-Mittal combine was not given a chance to match or rebid, ONGC sources said.

PetroKazakhstan was the first company India’s flagship ONGC had bid for jointly with the world’s largest steel producer Mittal Group.

The Chinese will come to rue the day that they “succeeded” in buying this company at an outrageous price. The taxpayers of India have been saved a huge amount of money since ONGC lost the bid. The bureaucrats are playing with other people’s money to inflate their ego on the global stage by overpaying for lousy assets. Fortunately, India lost this one.

A small change in the Electricity Act in India to reduce theft would do more to save money and enhance “national security” than any of these worthless projects in countries where the major private sector oil companies are rightly avoiding the action (and leaving the field for ignorant civil servants and want-to-be Napoleons in the diplomatic and strategic studies community).

6 Comments »

  1. The Indian Economy ? Blog Archive ? The Winner’s Curse

    For those keenly interested in the Indian Economy, like us, check fout the interesting group blog called The Indian Economy Here’s a good post about China’s pyrrhic victory in acquiring PetroKazakhstan:The Chinese will come to rue the day that they

    Trackback by The Stalwart — August 24, 2005 @ 7:30 am

  2. Based on what data do you claim that the price is “outrageous”?

    Comment by axe — August 25, 2005 @ 2:22 pm

  3. The point of buying is not the cost but the “Control” – silly hindoooos – still do not understand geopaltics

    Comment by Ullu — August 27, 2005 @ 5:04 pm

  4. If it was only about price/cost benefit analysis – benefits to stockholders/benefits to taxpayers blah blah then the Americans would have allowed the Chinese to buy Chevron because the Chinese were offering a higher price

    Comment by UlluKaPatha — August 27, 2005 @ 5:08 pm

  5. Ullu says The point of buying is not the cost but the “Control” – silly hindoooos (sic) – still do not understand geopaltics

    Control of what? A 2nd-tier asset…

    The Japanese bought a bunch of prime real estate in the US in the late 1980s/ early 1990s, and there were similar concerns in America about losing one’s “soul”….

    Who’s laughing now?

    Oil is a traded asset with multiple suppliers. Not sure why some have this misconceived notion that the sellers of oil (Arabs or any one else) are doing the rest of the world a favor by selling at market prices.

    You think Nigeria or Venezuela or Saudi Arabia or Russia can afford to stop selling oil on the world market? Given the dire straits of their economies, they need the money even more so than the buyers need the oil. Saudi Arabia’s GDP per head is a third of what it was twenty-some years ago.

    Comment by Prashant Kothari — August 27, 2005 @ 7:35 pm

  6. [...] Not quite, says our friend and erstwhile guest blogger, Blue Sky sends us a guest post [...]

    Pingback by The Indian Economy Blog » Income Inequality In India: Is The Sky Falling On Our Heads? — August 11, 2007 @ 7:33 pm

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