The Hindu Business Line : Oil India, HPCL may jointly bid for exploration licensing

Plans ahead
The two companies are exploring opportunities in compressed natural gas marketing and city gas distribution too.
The equity structure for the projects will be decided on a case-by-case basis.

Richa Mishra

New Delhi, Nov. 1 The forthcoming oil and gas exploration licensing rounds may see joint participation by two state-owned entities Oil India Ltd (OIL) and Hindustan Petroleum Corporation Ltd (HPCL).

The two companies are planning to further cement their ties by inking an understanding for exploring opportunities in both upstream and downstream activities as well as compressed natural gas (CNG) marketing and city gas distribution (CGD).

In the upstream sector, OIL and HPCL could jointly participate in the forthcoming oil and gas licensing round, as well as look for opportunities overseas, sources said. Recently, OIL joined HPCL along with others for a refinery-cum-petrochemical project in Visakhaptanam.

‘MoU soon’

“A memorandum of understanding is expected to be signed soon,” the sources told Business Line.

While OIL has expertise and resources in oil and gas exploration, development and production, and transportation, HPCL is well established in petroleum refining, marketing, transportation and distribution of petroleum products. “With a view to synergising the respective strengths and for the purpose of sharing and minimising the individual risks, expenses and investments related to joint participation, the two would be joining forces,” the sources said.

Both OIL-HPCL would like to pursue upstream and downstream opportunities in India and abroad.

The understanding will help the companies to synergise their respective strength and minimise risk elements. However, HPCL could be the second choice for exploring upstream business overseas, as the first preference will be with Indian Oil Corporation Ltd, with whom OIL already has an understanding, industry sources said.

Equity structure

As regards the equity structure for the projects where the two propose to jointly participate, the sources said that it would be decided on a case-to-case basis and deliberated on at a later stage.

When compared with giants like ONGC, OIL is considered to be a small player among those pitching for oil and gas assets abroad.

OIL is currently looking at partnerships with small companies for acquiring assets in Russia, Africa and Europe. For acquiring larger assets, it has a tie-up with Indian Oil.