OIL to float foreign arm in 4 months, sets sight on Lanka

Lines up a $1-billion capital expenditure plan for exploration purposes abroad

Oil India Ltd (OIL) is set to float a foreign arm in four months for exploration and acquisition of hydrocarbon assets abroad, thereby becoming the third state-run oil company to have a dedicated subsidiary for foreign operations.

The company, which has a subsidiary in the US and special purpose vehicles (SPVs) for foreign businesses, has lined up a $1-billion (around Rs 5,800-crore today) capital expenditure plan for exploration purposes abroad, a top official said.

"There will be a separate fund for our overseas operations through the company. For exploration purposes only, we have lined up about $1 billion in the next three years. For acquisitions, we have enough cash balance of around $2 billion," said Nripendra Kumar Bharali, director (human resources and business development), OIL.

Meanwhile, in an effort to set up its foothold in Sri Lanka, the company would participate in the bidding of 13 blocks in the Cauvery and Mannar Basins of the nation's northwest coast.

OIL's US subsidiary is looking at shale gas assets. Shale gas is natural gas found trapped within shale formations. Both OIL and IndianOil Corp Ltd (IOC) acquired a 30 per cent stake in a shale gas asset of Carrizo in the US last year. Both companies have an understanding for acquisitions abroad and had floated an SPV in 2005 for such buyouts.

"The operations of all our overseas assets, the US subsidiary and SPVs in various countries would now come under the new subsidiary. Our team is working to set up the company in another four months. Our association with IOC is project-based and that we would continue to do," said Bharali.

Oil and Natural Gas Corp and Bharat Petroleum Corp Ltd (BPCL) are the other two state-run oil companies that have specific subsidiaries for foreign operations. Both ONGC Videsh Ltd and BPCL's Bharat PetroResources Ltd have presence in several countries.

OIL now has presence in countries like Sudan, Libya, Venezuela, Egypt, Timor Leste, Yemen, Nigeria, Iran, the US and Gabon. In Gabon and Libya, it is the main operator of its blocks.

"The new subsidiary would look at both conventional and unconventional assets, but mostly producing assets," Bharali added. Recently, a report on OIL's overseas exploration, done by PFC Energy, had asked the company to look at discovered or producing properties.

Regarding OIL's Sri Lanka plans, Bharali said the company might team up with another firm having expertise in managing deepwater blocks to acquire assets in the island nation.

TO SHORES AFAR
ONGC and BPCL already have presence in various countries through their subsidiaries:

ONGC Videsh
Vietnam, Myanmar, Russia, Kazakhistan, Iraq, Syria, Libya, Nigeria, Sudan, South Sudan, Brazil, Colombia, Cuba, Venezuela

Bharat PetroResources Limited (BPRL)
Brazil, Australia, East Timor, Mozambique and Indonesia

OIL India (proposed)
Sudan, Libya, Venezuela, Egypt, Timor Leste, Yemen, Nigeria, Iran, US and Gabon