New Delhi: Indian Oil Corp. (IOC), India’s leading refiner, has entered into talks with PT Medco Energi Internasional Tbk. of Indonesia, better known as MedcoEnergi, to acquire equity stakes in hydrocarbon blocks that will be offered by Yemen. The company also plans to bid for blocks in Libya, which will be offered later this year, with Oil India Ltd (OIL).
Acquiring equity stakes in hydrocarbon blocks has become a key focus for IOC, as it wants to ensure an assured supply for its refineries and become an integrated player in the oil and gas business.
“While we are talking with MedcoEnergi for Yemen, for the Libyan blocks we will try with OIL, as we already have two blocks there with OIL. Our first choice will be OIL. We are... in touch with MedcoEnergi,” said B.M. Bansal, director for planning and business development at IOC.
Both Yemen and Libya are expected to start their fourth round of awarding blocks through international bidding later this year. While Yemen is expected to offer five to 10 blocks in the offshore area, Libya is expected to offer 10 to 15 blocks in both onshore and offshore areas.
Libya is estimated to have more than 100 billion barrels of oil reserves, accounting for 40% of Africa’s reserves. The Yemen government estimates its oil reserves to be around 9,718 billion barrels.
IOC currently has a total of 17 blocks (both domestic and overseas) in its exploration and production portfolio.
Industry analysts believe that being present in the oil and gas exploration and production sector will help IOC to be cushioned against the volatile crude prices.
Analysts also say that from a risk-mitigation perspective, it makes great sense to partner with someone who has the requisite expertise. Said Ajay Arora, partner at accounting firm Ernst & Young: “As they had earlier bid aggressively for acquiring the Indonesian energy major, they have been able to build a relationship over a period of time. It is a complementary relationship as MedcoEnergi has expertise in the offshore (exploration and production) work.”
IOC was recently awarded Blocks 82 and 83 in the onshore area of Yemen under its third round of international bidding. It won those blocks as part of a consortium that includes MedcoEnergi, Kuwait Energy Co. and OIL. While IOC and OIL have 15% stake in each of these blocks, MedcoEnergi and Kuwait Energy have 45% and 25% stake respectively.