A consortium of Indian Oil Corp. (IOC) and Oil India Ltd (OIL) is bidding for developed oil blocks in Nigeria in partnership with Edo State, one of the 36 states in the oil-rich country.
The bid is part of IOC’s effort to ensure a supply for its refineries and become an integrated player, one that does everything from exploration and production of oil, to refining it and retailing fuel.
“We are going to bid, along with Edo State, for the new blocks, for which the bidding round has already been announced,” said B.M. Bansal, director for planning and business development at IOC.
The public-sector duo are looking at blocks that should be ready to produce around two lakh barrels per day and have a proven reserve of one billion barrels of oil.
Industry analysts believe that being present in the oil and gas exploration and production sector will help IOC cushion itself against volatility in crude prices.
Countries in Africa and the Commonwealth of Independent States have become IOC’s key focus areas. This is because oil-rich West Asian countries only offer service contracts and not production-sharing ones preferred by IOC.
Nigeria has emerged as a hot destination for Indian public sector units.
Even India’s leading power generation company, NTPC Ltd, is close to finalizing the supply of liquefied natural gas from Nigeria, which may require an estimated investment of $1.7 billion (Rs6,970 crore).
Nigeria’s crude oil reserves are around 28.2 billion barrels, while its natural gas reserves aggregate 165 trillion standard cubic feet.
Nigeria is auctioning a total of 45 exploration blocks. Of these, 11 blocks are in deep-water offshore, 10 blocks are in shallow water, 13 blocks are onshore, and another 11 are located in inland basins.
While the deadline to register bids is 2 May, the results will be declared five days later.
IOC will not be bidding for the deep-water blocks or the gas blocks as it neither has the technology nor the expertise to bid alone for deep-water blocks.
The company also plans to set up refineries in the African nation provided it wins a good developed block.
“We have a memorandum of understanding with Edo State to go together with it for setting up the refinery and bidding for the blocks. We are looking for very few blocks but good blocks,” Bansal added.
IOC currently has a total of 17 blocks (both domestic and overseas) in its exploration and production portfolio.