ONGC, the Indian state-owned oil group, today sought to tap into the vast oil reserves of the former Soviet Union by launching a takeover offer for Imperial Energy.

Shares in London-listed Imperial surged 23 per cent after the Russia-focused oil company confirmed it had received a takeover approach.

Imperial declined to name the bidder but it is thought that ONGC Videsh, the overseas arm of the Indian state oil and gas producer, submitted a preliminary proposal to buy the company.

Banking sources said today that discussions were ongoing.

Shares in Imperial rose to 951p on the news, giving it a value of around £990 million. The group’s closing share price on Friday was 772p.

“The board of Imperial confirms that it has received an approach, which may or may not lead to an offer being made for the company,” said a brief statement from Imperial, which has an estimated 920 million barrels of oil and gas reserves in the Tomsk region of western Siberia and in northern Kazakstan.

India’s government has given ONGC responsibility for securing access to energy resources abroad to help fuel India’s booming economy but the company has struggled to pull off deals.

It was thwarted in an earlier effort to buy PetroKazakhstan by CNPC of China.

ONGC declined to comment but Imperial is thought to be unlikely to accept an offer of below £12 per share. Some experts believe Imperial’s range of assets are significantly undervalued.

Merrill Lynch, for example, has estimated Imperial’s net asset value to be as much as £17 per share.

ABN Amro also recently issued a "buy" recommendation on Imperial’s stock, pointing out that it was undervalued, largely because the group was forced to launch a heavily discounted rights issue earlier this year to raise £306.7 million of much-needed funds.

ONGC’s approach is believed to have been significantly lower than this.

Nathan Piper, an analyst at RBC Capital Markets, said in a note to clients that the approach could draw out further bidders.

Last autumn, Imperial rejected efforts by Gazprombank, an arm of Russian state-controlled energy giant Gazprom, to gain a 25 per cent share of the company.

Mr Piper said that Gazprom, Lukoil, another Russian oil and gas group, as well as Petronas of Malaysia and ENI of Italy could all emerge as potential bidders.

Gazprom and Lukoil both declined to comment yesterday. Petronas and ENI could not be reached for comment.

Western Siberia is the most prolific oil-producing region in Russia and includes some of the world's largest oil fields.

Imperial's assets are typically underdeveloped discoveries from the Soviet era, when drilling technology and techniques were limited.

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