IFFCO ENTERS OIL SECTOR, BUYS 10% STAKE IN PETROGAS

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IFFCO, the world’s largest manufacturer and marketer of fertilisers in the cooperative sector, has marked its entry into the oil & gas exploration sector by acquiring 10% stake in Canadian firm Americas Petrogas for an undisclosed sum. The company has also picked up 20% stake in GrowMax, a subsidiary of Americas Petrogas, Iffco’s managing director U S Awasthi said here. The possibility of the equity stake being increased later is not being ruled out.

   Iffco, consequently, has become a key stakeholder in GrowMax’s Bayovar project in Peru, which has large potash deposits covering an area of about 820 sq km. Americas Petrogas owns 11 blocks, measuring 1.5 million acres, in Neuquen basin of central Argentina and has started trial production in four wells. The production is likely to reach 5,000 barrels per day by December. Iffco and Petrogas are also considering putting up an urea plant in Argentina using the gas from the field with an investment of $1 billion, depending on the quantity of the gas available, officials said. The oil being produced currently is described as “very pure”.

   Iffco was looking at three other companies before it settled on Petrogas and GrowMax. “We have been considering entering into the oil and gas sector for the last five years and finding Americas Petrogas to be the best partner among three others,” Mr Awasthi said. He maintained that oil and gas exploration in the region would work out to only 25% for the standard costs anywhere else, making it highly cost effective. However, he asserted that Iffco does not have plan to participate in New Exploration and Licensing Policy. “India is not the market for our oil & gas exploration.”

   The company is also to invest an estimated $125 million into the first phase of the potash project. “We are the first Indian enterprise to have major overseas investment in potash project as a step towards backward integration to strengthen sourcing for the manufacture of phosphatic fertilisers in India,” said Mr Awasthi.

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