Indian Oil Corp, the country’s second-biggest refiner, plans to acquire oilfields in Africa as part of a $1 billion overseas investment plan, its chairman said.
“Africa is top of our list to buy assets because it is near India and has good quality crude,” Brij Mohan Bansal said in an interview at his office in New Delhi today. “We are planning retail outlets in Indonesia.”
State-run Indian Oil’s renewed plans to expand overseas came after the government freed gasoline prices from its control last month and said it will eventually allow refiners to set diesel rates, helping to increase cash flow. The refiner has set aside $1 billion for acquisitions overseas, Bansal reiterated.
“Africa offers many grades of crude and gives refiners security of supplies to have fields there,” said Vinay Nair, a Mumbai-based analyst with Khandwala Securities Ltd. “They will, however, still need financial support from the government to help make profits.”
The refiner delayed crude-processing and pipeline projects overseas, including Nigeria and Turkey, because of reduced cash flow after selling fuels below cost, Bansal said in July last year. Indian Oil and Turkish builder Calik Holding had planned to spend $4.9 billion to build a 300,000 barrel-a-day refinery in Ceyhan on the Mediterranean coast.
The companies, with Eni SpA, Europe’s fourth-largest oil company, had also planned to spend $2 billion on a pipeline from Samsun on Turkey’s Black Sea coast to Ceyhan to transport as much as 1.5 million tonnes of Central Asian crude oil a day.
Delay in plans
The shares have increased 23 per cent in Mumbai trading this year, compared with the three per cent gain in the benchmark Sensitive Index of the Bombay Stock Exchange. The stock declined 3.8 per cent to Rs 374.45 today.
Indian Oil, which owns stakes in ventures in Africa and West Asia, had plans to invest in refinery and pipeline projects in Nigeria, former company spokesman M Kali Krishna said in October 2006.