NEW DELHI, January 4: Hindustan Petroleum Corporation Ltd (HPCL) has signed memoranda of understanding (MoU) with ICICI, the Housing Development and Finance Corporation (HDFC) and some other financial institutions (FIs) for its diversification upstream. The financial institutions will pick up a 50 per cent stake in HPCL's exploration and production venture. The Rs 18,000 crore turnover petroleum refining and marketing company will hold the remaining 50 per cent stake in the Rs 20 crore equity of its exploration and production (E&P) joint venture. The joint venture is expected to have an initial investment outlay of roughly Rs 3,000 crore. The company top brass say that HPCL will restrict its upstream activities to discovered fields in the beginning and only venture into high-risk areas like exploration at a later date.According to HPCL's annual report for last year, the company planned to be the main promoter in the E&P joint venture ``with matching (equity) participation from its joint venture partners.'' The joint venture partners, the report says, would initially be financial institutions and ``the balance equity would eventually be raised from other interested E&P companies and the public.''The investment plan seems to have undergone subtle changes since, for E&P companies (like the Oil and Natural Gas Corporation at home and multinationals Shell International or Mobil) do not as yet figure among HPCL's list of partners. ``We may have some technical collaboration with someone,'' said HPCL's director, finance, SD Gupta, when asked if the company was thinking of a tieup with other E&P companies as well.The two other mega oil refining and marketing companies at home, Indian Oil Corporation and Bharat Petroleum Corporation Ltd (BPCL), are also diversifying upstream and are known to be scouting for partners among the E&P companies. IOC already has a working relationship with ONGC Videsh that is intended to help both the companies synergise in upstream and downstream activities. Hindustan Petroleum seems to have picked on moneylenders rather than technology vendors at this stage, because it plans to begin small in its diversification upstream.
