Hyderabad: State-owned Oil India Ltd (OIL) plans to name eight advisers to help it acquire oil-related assets in African nations, including Nigeria, Angola and Gabon, to secure the energy needs of the world’s second fastest growing major economy.
Goldman Sachs, Royal Bank of Canada (RBC), Royal Bank of Scotland (RBS), UBS AG and Credit Suisse are among the companies that the firm will choose from, said a senior OIL executive, who declined to be named.
“We already have seven investment advisers to help us secure assets overseas,” said the executive. “We want to broadbase our list given our increased focus on getting assets overseas.”
OIL and ONGC Videsh Ltd, the overseas unit of Oil and Natural Gas Corp. Ltd, are scouting for overseas assets to meet the needs of the nation, which imports more than 80% of its energy requirements. Consumption of energy in India is likely to double by 2030 to the equivalent of 833 million tonnes (mt) of oil, according to an International Energy Agency forecast.
File photo Bloomberg
OIL is in talks with French oil explorer Maurel and Prom to buy a stake in its Gabon blocks valued at around $2 billion (Rs 9,800 crore), and is eyeing opportunities in West African nations such as Nigeria, Angola and Gabon. OIL chairman and managing director N.M. Borah confirmed that the explorer was looking for assets in the three countries.
Of the 163.59 mt of crude oil imported by India in 2010-11, 15.81 mt came from Nigeria, with Angola and Gabon contributing 9.64 mt and 0.39 mt, respectively.
While an external spokesperson for Goldman Sachs and the office of the Asia-Pacific spokesperson for Credit Suisse declined comment, questions emailed to the external spokespersons of RBS, RBC and UBS remained unanswered till press time.
OIL has finished inspecting Maurel and Prom’s Gabon assets, paving the way for price negotiations. The oil explorer’s current investment advisers include Citigroup, Morgan Stanley, BNP Paribas, Deutsche Bank, Nomura, Bank of America-Merrill Lynch and HSBC.
OIL, which has set aside as much as Rs 4,500 crore for overseas acquisitions, reported a 10.6% rise in profit to Rs 2,887.73 crore in the year ended 31 March. Revenue from operations rose 5% to Rs 8,303.38 crore.
Borah confirmed that the technical due diligence for the assets was over and price evaluation was the next step.
“A lot of companies have approached us to bring us good opportunities. Since we need the assets and these firms can help us, we plan to shortlist them soon,” he said, explaining the rationale behind enlisting additional advisers.
The process is expected to be completed within the next 20 days.
Apart from the 163.59 mt of crude oil, India also imported 17.31 mt of petroleum products and 9.79 mt of liquefied natural gas in 2010-11. By 2030, the country is expected to import 90% of its energy needs.
The growing demand for energy assets has pitted India against China in a geopolitical race to acquire as much of the world’s resources as they can. The rivalry for control of natural resources and energy assets has inflated overseas acquisition costs.
In recent years, India has scrambled to come up with a cohesive economic diplomacy policy in Africa, where it has lost ground to China. In an effort to catch up with the progress China, South Korea and Malaysia have made with their African plans, India has held two India-Africa summits— one in New Delhi in April 2008 and the second in Ethiopian capital Addis Ababa in May. India has set a target of $70 billion in trade with the continent by 2015.