$2 billion IOC war chest for foreign E&P firm takeover

IOC has put up a war chest of $2 bn for acquiring a medium-sized foreign oil firm to set up its own exploration and production division. On the radar are firms like Niko Resources, Canada, Cairn Energy Plc, Tullow and Premier Oil (all of UK) among others.

“A proposal for setting up an E&P subsidiary is listed for approval at the company’s board meeting on April 28,” sources said. After the board approval, IOC, which commands 60 per cent of the petrol retail market in India and owns half of the 115 million tonnes refining capacity in the country, will go scouting for an E&P firm that will help it become a fully integrated company.

IOC aspires to acquire oil and gas fields through the subsidiary to cut dependence on imports to meet its crude oil requirement. Sources said the move comes in the wake of government turning down the request for splitting the country’s flagship overseas investment firm ONGC Videsh Ltd for accommodating IOC and gas firm Gail India Ltd as partners. “A subsidiary will not clash with government decision as OVL will continue to be the flagship acquisition vehicle in government-to-government deal while IOC’s E&P division will venture into taking over private firm stakes,” they said.