IOC'S $2 BN
WAR CHEST FOR ACQUIRING FOREIGN E&P FIRM
Indian Oil Corporation, the country's largest refiner, has
put up a war chest of $2 billion for acquiring a medium-sized
foreign oil firm to set up its own exploration and production
division.
On IOC's radar are firms like Niko Resources
of Canada, Cairn Energy Plc, Tullow Oil and Premier Oil (all
of UK) among others.
"A proposal for setting up an E&P
subsidiary is listed for approval at the company's board meeting
on April 28," sources said.
After the board approval, IOC, which commands
60 per cent of the petrol retail market in India and owns
half of the 115 million tonnes refining capacity in the country,
will go scouting for an E&P firm that will help it become
a fully integrated company.
IOC aspires to acquire oil and gas fields
through the subsidiary to cut dependence on imports to meet
its crude oil requirement.
Sources said the move comes in the wake
of government turning down the request for splitting the country's
flagship overseas investment firm ONGC Videsh Ltd for accommodating
IOC and gas firm GAIL India Ltd as partners.
"A subsidiary will not clash with
government decision as OVL will continue to be the flagship
acquisition vehicle in government-to-government deal while
IOC's E&P division will venture into taking over private
firm stakes," they said.
IOC is looking for a medium-sized foreign
firm with expertise in oil and gas exploration and production.
"The company wants the best of professionals to stand
tall against OVL, the subsidiary of Oil and Natural Gas Corp,"
sources said.
Government had, last fiscal, also ruled
out creating another OVL type firm with GAIL, IOC, Bharat
Petroleum Corp Ltd and Oil India Ltd as promoters saying it
didn't want two Indian companies to compete with each other
for the same property.
It had asked IOC, GAIL and OIL to go with
OVL as partners in future acquisitions of oil and gas fields
abroad. While OVL was to have 40 per cent of equity oil abroad,
GAIL and IOC were designated to take 25 per cent apiece and
OIL the remaining 10 per cent.
IOC and GAIL had sought either sharing
in the equity and participation in the OVL board or being
allowed to set up their own overseas subsidiaries to fulfill
their ambition of owning fields in oil-rich nations.
With domestic crude oil production of
33 million tonnes meeting only 30 per cent of the requirement,
India is acquiring oil and gas fields abroad to attain energy
security.
Sources said if India were to bridge the
existing demand gap through equity oil alone, it would be
required to attain production levels of nearly three million
barrels per day from overseas acreages. This can be compared
with 60,000 barrels per day currently available, which with
the existing assets of OVL, may reach 240,000 barrels per
day by 2010.
