New Delhi: An Indian consortium of state-owned energy companies is no longer interested in buying a stake in Australia’s Advent Energy Ltd, said two of the combine’s three members.
The consortium—comprising Oil and Natural Gas Corp. Ltd (ONGC), Oil India Ltd (OIL), and GAIL (India) Ltd—was earlier in talks to acquire a 25% stake in the Perth-based oil exploration company for around $1 billion (Rs 4,500 crore).
“For GAIL, the Advent Energy deal is off,” said B.C. Tripathi, chairman and managing director at GAIL, India’s largest gas transmission company.
“We were not quite interested in the deal,” said N.M. Borah, chairman and MD at OIL.
Joeman Thomas, managing director of ONGC Videsh Ltd, the overseas arm of ONGC, did not respond to a message left with his office on Tuesday. Questions emailed to Advent Energy on Tuesday remained unanswered.
The Indian consortium confirmed the talks with Advent in November. But that same month, Advent’s promoters MEC Resources Ltd, BPH Corporate Ltd and Grandbridge Ltd said in separate statements to the Australian Securities Exchange that media reports in India on formal discussions between Advent and the consortium were incorrect.
Advent’s portfolio includes exploration permits in offshore Sydney basin, Carnarvon basin and Bonaparte basin, according to its website.
India is concerned about energy security, given that it imports 80% of its annual consumption. By 2030, the country is expected to import 90% of its energy needs.
Growing demand for energy assets has pitted India against China in a geopolitical race to sew up as much of the world’s resources as it can. Rivalry between the two nations for control of natural resources and energy assets beyond their borders has inflated acquisition costs.
Financials of Indian state-owned energy companies are stretched as fuel is sold below cost in the country, limiting the ability of these firms in acquiring energy assets abroad.
State-owned oil marketing firms such as Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd would have together posted an additional net profit of Rs 5,246 crore for the year ended 31 March had they not absorbed a notional cumulative loss of Rs 6,894 crore on selling fuel below cost.
The government’s direction to oil and gas explorers such as ONGC, OIL and GAIL to pay Rs 30,295.75 crore as compensation to state-owned oil retailers in the previous fiscal year hurt their balance sheets as well.
A decision on increasing the prices of diesel and cooking gas, expected to be taken by an empowered group of ministers on pricing of petroleum products that’s headed by finance minister Pranab Mukherjee, has been postponed.