Indian oil firm to buy Imperial

Demand for fuel in India has soared

India's biggest oil producer, ONGC, has agreed to buy Imperial Energy for $2.6bn (£1.4bn) - but it may face a battle to secure the deal.

Imperial has access to resource-rich Russian oilfields and analysts say that ONGC is looking to secure supplies of oil to fuel India's booming economy.

However, Chinese oil giant Sinopec is reported to be contemplating a counter bid for London-listed Imperial.

Sinopec confirmed interest, but said it was yet to decide whether to pursue it.

The Chinese and Indian governments have urged their state-owned energy giants to increase their access to scarce energy resources.

Expansion opportunity

Buying Imperial would represent "an important addition" to ONGC's operations, the Indian firm said.

It added that the "technical expertise will further enhance the attractive growth potential of the business" in the Tomsk region of Siberia where Imperial has interests.

"Additionally, we view this as an important opportunity to expand on the continuing co-operation between Russia and India in the energy sector."

It is believed that ONGC made a higher offer earlier in the year, when the price of oil was higher.

"This is a good price, given consideration for the current softening in oil prices, the turbulence on global stock markets and the geopolitical stage," brokerage Daniel Steward said in a research note.