Tata group hires EY to explore sale of oil and gas business
Mumbai: The Tata group has hired EY to explore the sale of Tata Petrodyne Ltd (TPL), its oil and gas exploration and production business, two people aware of the development said.
Tata group is pruning its portfolio and exiting businesses that are unprofitable or lack scale. Tata Petrodyne is one such business.
On 3 August, Mint reported that the group may shut down Tata Petrodyne.
“EY is reaching out to companies to gauge their interest in TPL. We were approached, too, but we declined the proposal as we are not looking at acquiring any company right now. We have our own field developments to focus on,” one of the two people cited above, the exploration and production head of a private energy company, said on condition of anonymity.
In an emailed response, a Tata Sons Ltd spokesperson said: “We do not comment on market speculation.”
In an emailed response, EY, formerly known as Ernst & Young, said: “We do not comment on any company-specific developments.”
Tata Petrodyne has participating interest in four oil and gas blocks in India and one each in Indonesia and Tanzania.
The company has a net worth of Rs385 crore.
In the past few years, Tata Petrodyne has skipped auctions of exploration and production blocks in the country and slashed investments in its hydrocarbon blocks.
In India, Tata Petrodyne holds a 21-30% stake in four oil and gas blocks. Its partners in these fields include Hardy Exploration and Production (India) Inc.; Hindustan Oil Exploration Co. (HOEC) Ltd; Oil and Natural Gas Corp. Ltd (ONGC), and Cairn India Ltd.
“Tata Petrodyne held a few prospective blocks. Its PY-3 field is prolific, but was shut from July 2011 due to the expiry of facility contract and class certification owing to non-renewal of floating production unit contract by the government,” said the second person mentioned above, also on condition of anonymity.
Tata Petrodyne’s website states that the joint venture companies in PY-3, an offshore block in the Cauvery basin, had submitted a full field development plan with peak oil production of around 9,000 barrels of oil per day, and are striving to revive the field.
Outside India, Tata Petrodyne holds blocks in Indonesia and Tanzania.
It has subsidiaries in Amsterdam, and representative offices in Perth, Jakarta and Dar-es-Salaam, according to its website.
Tata Petrodyne was incorporated in 1993 and was originally promoted by Tata Industries Ltd with the objective of spearheading the group’s venture into the upstream sector of the oil and gas industry.
However, when the group decided to consolidate all its energy businesses into a single corporate entity, Tata Power Co. Ltd acquired ownership of Tata Petrodyne.
Given the nature of large investments required in the oil and gas business, group holding company Tata Sons in March 2005 bought Tata Power’s 100% stake in Tata Petrodyne.