The Hindu Business Line : IOC adopts aggressive strategy for overseas projects

Playing safe
Strategy of combining projects first adopted by IOC in Nigeria.
Now using similar line for proposed venture in Egypt.
Company currently has 7 oil and gas assets abroad.

Richa Mishra

New Delhi, Dec. 19

Indian Oil Corporation Ltd (IOC) has adopted an aggressive strategy for its overseas projects. The company proposes to club upstream (oil and gas exploration) and downstream (refinery) activities together while exploring business opportunities abroad. In other words, for exploiting its strength in the refining sector, the company is seeking oil and gas exploration assets abroad.

Mr B.M. Bansal, Director Planning and Business Development, IOC, said, “We don’t want to go only for refinery projects. We are widening our upstream portfolio by having a mixed bag of exploration, developed, and producing assets.”

He told Business Line that “the company does not want to venture into a country just for a refinery project, as they may be profitable now, but tomorrow the situation may change.”

This strategy of combining the upstream and downstream projects was first adopted by Indian Oil in Nigeria and now the company is adopting a similar line for Egypt. Indian Oil currently has seven (excluding the recent acquisition in Libya) oil and gas assets abroad.

Regarding the company’s proposed venture in Egypt, Mr Bansal said: “It has been in-principle agreed that in lieu of the refinery project in Egypt, Indian Oil will be offered oil and gas blocks on nomination basis.” Indications are that Indian Oil would be offered two blocks on a nomination basis in Egypt.

When the Petroleum Minister, Mr Murli Deora, visited Cairo in April, there was an interest to joinwith Egyptian General Petroleum Corp to develop refinery and petrochemical project in that country.

“We have been informed about forming a joint working group with the Egyptian company to deliberate on the proposal,” Mr Bansal said. “Only after the joint working group recommendations come in will a decision be taken on the refinery size and investment,” he added.

Report

A detailed report on commercial viability of the project would be ready by 2010. Based on the preliminary studies, the companies will decide on setting up a joint venture. Egypt has also offered to ensure crude supplies for the new refinery. Egypt has nine refineries of which Egyptian General Petroleum Corp, a public sector company responsible for exploration and production of crude oil in the country, operates eight.

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