New Delhi: State-owned Oil India Ltd, which is in talks with French oil explorer Maurel and Prom SA to acquire a stake in its Gabon blocks valued at around $2 billion (Rs 9,310 crore today), plans to close the deal by March.
“We plan to complete the acquisition in this financial year,” a company executive said, requesting anonymity. “There are strict timelines in place and we plan to adhere to them.”
Also See | Building Pressure (PDF)
Chairman and managing director N.M. Borah declined to name the French explorer, but said: “The process is on and the effort is to acquire the blocks.”
A Maurel and Prom spokesperson declined to comment.
Oil India is in talks with Maurel and Prom for its assets in the west central African country Bloomberg news agency reported on 20 July.
With India importing more than 80% of its energy needs, government-owned firms have been scouting overseas for securing assets. Last year, India imported 163.59 million tonnes (mt) of crude oil. It also imported 17.31 mt of petroleum products and 9.79 mt of liquefied natural gas (LNG) in 2010-11. By 2030, the country is expected to import 90% of its energy needs.
Such efforts need government and companies to work in concert, an expert said.
“National oil companies typically succeed in acquiring acreages if there is a strong political connect and support between the countries involved,” said Gokul Chaudhri, partner at audit and consulting firm BMR Advisors Pvt. Ltd. “Stand-alone efforts have had limited success.”
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.
Experts partly attribute China’s greater presence in Africa’s hydrocarbon sector to the Indian government’s failure to actively engage African countries.
Maurel and Prom, with a focus on Africa and Latin America, has reserves of 288 million barrels of oil or oil-equivalent. It has been present in Gabon since 2004 and holds exploration and production permits in seven blocks. Its fields in Gabon produce around 17,000 barrels of oil per day.
Earlier this year, it sold two units—Maurel and Prom Venezuela to Argentina’s Integra Group and Caroil SAS, a drilling subsidiary, to Tuscany International Drilling Inc., a Canadian oil services company.
Oil India has set aside up to Rs 4,500 crore for overseas acquisitions in the hydrocarbon sector and is looking at producing assets overseas.
While state-owned companies such as Oil and Natural Gas Corp. Ltd and Oil India have invested Rs 64,832.35 crore for acquisition of exploration and production assets overseas, the financials of Indian state-owned energy firms are stretched as fuel is sold below cost in the country, limiting their ability to buy overseas energy assets.
Oil India aims to acquire a technology firm in the hydrocarbon space and plans to run it as a strategic business unit on the lines of oilfield service firms such as Schlumberger Ltd and Halliburton Co.
The company’s net profit in fiscal 2011 rose 10.62% to Rs 2,887.73 crore. Annual revenue from operations rose 5.03% to Rs 8,303.38 crore.