The Hindu Business Line : Global forays: `IOC more excited about upstream sector'

Chennai May 12 The expertise of Indian Oil Corporation is much sought after in many parts of the world. Only last week did Cairo ask IOC if it would be interested in putting up a refinery in Egypt. There have been other countries— Turkey, Nigeria, Russia... .

IOC's response to such overtures has been one simple exchange offer: okay, we will put up a refinery, will you give us crude?

"We are more excited about the upstream sector," Mr Sartak Behuria, Chairman and Managing Director, IOC, told Business Lineon Friday. "Otherwise, we can put our money in projects in India," he noted.

India, Mr Behuria said, had not looked much at several promising countries, but was keen on making amends. That is why the Petroleum Minister, Mr Murli Deora, led a delegation to a host of African countries recently.

Countries such as Nigeria, Algeria and Libya have wanted IOC to see if the company could look at a combination of a greenfield refinery and upgradation of existing refineries.

IOC has a few exploration blocks on hand and is yet to produce a barrel of oil of its own. The company is examining opportunities to farm into producing blocks.

But as much as it wants oil, it wants to get to know the international players in the business better.

Mr Behuria said that was much of the idea of IOC picking up a 12.5 per cent stake in the Samsun-Ceyhan pipeline project that lands in Turkey. Italian petroleum major Eni, IOC and Turkish government enterprise Calik Enerji are partners in the project that extends from Black Sea to Mediterranean. More players are expected to join in.

Observing that there were "tremendous opportunities", Mr Behuria said that it was about time that India got to know "what is happening where" rather than keep envying China for having done well in acquiring hydrocarbon assets.

Asked about the South Pars LNG project in Iran, Mr Behuria said that he was hopeful of an early resolution to the issue of LNG pricing. (Iran wants a higher price for the LNG than IOC thinks is fair.)

Of the 44 million tonnes of crude oil that is put into the seven refineries of IOC, only about 44 per cent is the cheaper, high-sulphurous variety.

HI-SULPHUR CRUDES

But this is set to change. Thanks mainly to the two residue-upgradation projects — one completed and the other under way — and the hydrocracker unit at Haldia, nearly two thirds of IOC's refining capacity will be able to handle high sulphurous crudes, Mr Behuria said.

High sulphurous crude oils are cheaper than low sulphur crudes.

The differential keeps fluctuating (it is today around $1 per barrel), but Mr Behuria expects the steady-state differential to be around $5 per barrel.

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