Sets aside Rs.4,000-5,000 crore for overseas acquisition

Seeking to expand its footsteps abroad, state-owned Oil India Limited (OIL) on Tuesday said it had set aside Rs.4,000-5,000 crore for acquisition of mid-size oil companies abroad.

Addressing a press conference to announce the annual results, OIL Chairman and Managing Director N. M. Borah said his company had joined hands with IOC to acquire exploration acreage in Gabon, Iran, Libya, Nigeria, Yemen, Timor Leste, Egypt, Venezuela and Sudan. “We are pursuing opportunities to acquire producing exploration and production assets in Africa, Middle East, Southeast Asia, South America, Australia, CIS countries and Russia,” he said.

OIL has abandoned its acreage in Libya after failing to find commercially viable oil. However, he said Block Shakti in onshore Gabon, West Africa, looked promising. In Venezuela, the company in partnership with ONGC Videsh, Petronas of Malaysia and Repsol of Spain plans to start heavy oil production from 2013 onwards.

Mr. Borah said the company was also looking at acquiring shale gas prospects in North America. OIL produced 3.627 million tonnes of crude oil and 2.352 billion cubic metres of gas in 2010-11 from its domestic fields.

OIL has cash balance of Rs.12,700 crore, most of which it plans to use in its current operations. “For inorganic growth, we can go up to Rs.4,000-5,000 crore. Also we can borrow if needed,” OIL Director (Finance) T. K. Ananth Kumar said.

OIL is on the lookout for a medium sized discovered or producing oil property/company overseas to supplement its present operations which are confined mostly in the North East of India. “Acquisition of overseas exploration blocks and oil and gas properties is a strategic focus area of OIL,” he added.

OIL reported a 30.5 per cent rise in net profit in the fourth quarter ended March 31, 2011, despite a sharp rise in its fuel subsidy burden. It reported a net profit of Rs.562.61 crore against Rs.430.99 crore in the year-ago period. Revenues increased to Rs.2,018.93 crore from Rs.1,832.14 crore in the period under review.

During the whole of 2010-11, the net profit was up 10 per cent at Rs.2,887.73 crore.