Varun Industries sells 51% in oil block to China’s Daqing

Varun Industries sells 51% in oil block to China’s Daqing

Mumbai: Indian trading house Varun Industries said it will sell a 51% stake in an on-shore oil block at Madagascar to Daqing Oilfield Co, a unit of state-run PetroChina, for $150 million.

It will continue to hold the remaining stake in the Hong Kong based joint venture which holds the asset.

“We won’t need to put in any more money. The investment will be made by the Chinese partner," Rahul Jain, senior vice president at Varun, told Reuters.

“We have lot of natural resource assets in Madagascar, including an offshore oil block and uranium blocks...We would like to monetize the assets in future," he said.

The sale will help Varun boost its capital by increasing liquidity, which it will use for other capex needs. Varun is currently working on a rare earths project, and also has a presence in gold mining.

Daqing Oilfield, the operator of China’s biggest oilfield, has targeted higher revenue from overseas assets, in line with the country’s hunt for overseas oil assets to fuel its fast-growing economy.

Daqing Oilfield produced 40 million tonnes or 800,000 barrels per day (bpd) of crude oil in 2010.

At 1:36 pm, Varun Industries shares were up 2.1% to Rs239.45 in a flat Mumbai market.