Crude Re­al­ity: In­di­anoil Plans to Build Strong Up­stream Port­fo­lio

Resource Digest - - CONTENT -

In­dian Oil Cor­po­ra­tion (IOC) is hop­ing to build a strong up­stream port­fo­lio as the oil rout turns as­sets cheaper while leav­ing tra­di­tional up­stream com­pa­nies such as Oil and Nat­u­ral Gas Cor­po­ra­tion with de­plet­ing cash re­serves.

The com­pany is eval­u­at­ing 10-12 ac­qui­si­tion op­por­tu­ni­ties ev­ery month and has en­tered into con­fi­den­tial­ity agree­ments on 4-5 prob­a­ble deals said a se­nior com­pany ex­ec­u­tive, re­quest­ing anonymity, in a grow­ing sign of the se­ri­ous­ness with which IOC is pur­su­ing its up­stream am­bi­tion.

IOC and Oil In­dia have signed a non-bind­ing agree­ment with Rus­sian oil firm Ros­neft for tak­ing 10% stake each in the TaasYuryakh field in east Siberia, the ex­ec­u­tive said. IOC is also seek­ing a stake in the Vankor field in Rus­sia, where ONGC pur­chased a 15% stake last year. “This is the time when we must build as­sets,“said the ex­ec­u­tive. The com­pany plans to raise its an­nual out­put to 6 mil­lion met­ric tonne (MMT) in five years from 0.5 MMT now, he said. The tar­get s equal to a third of the cur­rent an­nual do­mes­tic out­put of ONGC, the na­tion's largest oil pro­ducer.

IOC is a pe­riph­eral player in the ex­plo­ration and pro­duc­tion (E&P) busi­ness with mostly lower mi­nor­ity stakes in 10 blocks at home and seven over­seas. Only three of its projects pro­duce to­day. The com­pany is tar­get­ing to own mi­nor­ity stakes in pro­duc­ing or dis­cov­ered fields in geopo­lit­i­cally safe re­gions, the ex­ec­u­tive said. “It's a trade-off. Pro­duc­ing fields in safe ar­eas will not come cheap,“he said.

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