Oil India bullish on city gas distribution

Public sector Oil India Ltd (OIL) is bullish on the city gas distribution and plans to have pan-India presence in the segment.

OIL has already signed memoranda of understanding (MoUs) with gas distribution companies, which cover major parts of the country.

“The domestic gas segment offers great business opportunity for us as we plan to double our gas production in the next 5 years from 2.27 billion cubic metres per annum at present,” OIL Executive Director Narendra Bhalla said at a conference call here.

He said OIL had “strategically covered” the gas distribution vertical with tie-ups with other companies and would participate in future biddings across the country.

“We will play the role of technical partners in the city gas distribution model,” he added.

OIL is primarily engaged in exploration, development, production and transportation of crude oil and natural gas onshore in India.

It also has presence in foreign shores, including Egypt, Gabon, Iran, Libya, Nigeria, Yemen and Timor Leste.

The company has licences for six blocks in Krishna-Godawari basin. Of the six blocks, one is onshore, where OIL has the majority 90 per cent equity share vis-à-vis ONGC with 10 per cent share.

Under the New Exploration Licensing Policy (Nelp), OIL had bid for 55 blocks out of the total 300 odd blocks, of which it won 27 blocks for exploration.

“We have discovered oil in two blocks and work on other blocks is on in full swing,” Bhalla told Business Standard.

The zero debt company, OIL will invest over Rs 4,500 crore in the next two years for exploration, development, production and transportation of crude oil.

The company is also looking to acquire foreign firms involved in exploration to expand its global footprint. OIL has a cash balance of Rs 6,500 crore.

Meanwhile, OIL is hitting the capital market on September 7 with its IPO to raise over Rs 2,500 core. It has fixed the price band between Rs 950 and Rs 1,050 per equity share of Rs 10 face value. The bid closes on September 10, 2009.