Indian Oil Corporation (IOC) is close to purchasing a 40 per cent equity in an Indonesian oil and gas exploration firm, MEDCO, for around $600 million.This will be the Fortune 500 company’s first upstream overseas acquisition.MEDCO is Indonesia’s largest independent upstream company. Its portfolio comprises producing and exploration blocks. Its oil producing properties generate close to 70,000 barrels per day, while its annual gas production stands at around around 200 billion cubic feet.Around 85 per cent of MEDCO’s equity is with a holding company. The balance is held by financial institutions and the public. The holding company has three shareholders — Thailand’s PTT Exploration and Production Company with a 34 per cent stake, an American fund with around 26 per cent and an Indonesian family with 40 per cent.‘‘IOC is acquiring a 40 per cent stake in the holding company out of PTT’s and the American fund manager’s combined shareholding. IOC will thus become one of the largest shareholders in MEDCO along with the Indonesian family,’’ a senior IOC official said.IOC commands 60 per cent of the country’s petrol retail market and half the 115 million tonne total refining capacity. It plans to acquire exploration and production (E&P) firms to try and become a fully integrated company.‘‘With a foothold in the downstream sector, we aspire to acquire substantial stakes in oil and gas fields abroad to cut dependence on imports,’’ the IOC official said.IOC is also in talks with another French upstream firm for a similar acquisition.The company will appoint an international consultant for managing such acquisitions. ‘‘As one the potentially largest shareholders in MEDCO, we need assistance in managing the affairs of a global company coming under our fold,’’ the official said.On April 28, the IOC board cleared the setting up of an E&P division. A $2 billion plan for acquiring medium-sized foreign oil and gas firms was later drawn up by the company.
