Indian Oil sets aside $3 bn for overseas acquisition

Indian Oil Corporation, the nation's biggest refiner, may spend as much as $3 billion to buy an overseas oil producer to meet rising demand in the world's second-fastest-growing major economy.

The target would be a company that owned fields in Africa or countries that were part of the former Soviet Union, B M Bansal, director for business development, Indian Oil, said in an interview in New Delhi yesterday. The acquisition would be made jointly with Oil India, a state-run explorer, he said.

Indian Oil and Oil & Natural Gas Corporation, the nation's biggest explorer, are scouting projects in Russia, Kazakhstan, Iran and Africa to meet fuel demand in a race with China, which is securing energy supplies to feed the world's fastest-growing economy. India imports three-fourths of its oil as production from ageing domestic fields is slumping.

The refiner is seeking new oil-producing areas and has sought government help in its hunt for crude producers. "We would like to tap some new areas that are coming up in the world oil map rather than trying to get into already established markets,'' Bansal said. "We are working both at our level and at a government-to-government level.''

India, beaten by China to more than $10 billion of overseas energy assets in the last two years, plans to emulate its rival by building ports and railways in Africa to secure oil and gas fields.

Indian companies will seek to build refineries and pipelines in Africa's oil-producing nations, Oil Minister Murli Deora said at an India-Africa conference to discuss oil cooperation on November 6.

The South Asian nation needs to find new sources of fuel as the government wants to pump up growth to 10 per cent from about 9 per cent expected this year to increase jobs and eradicate poverty in a country where half the 1.1 billion population lives on less than $2 a day, according to the World Bank.

Indian Oil wants to get about 2 million tonnes of crude oil a year from overseas fields it will hold by 2012.

The company wants to own exploration areas overseas, fields that have already been discovered and need to be developed for production and producing areas, Bansal said. The company owns blocks in countries such as Libya, Nigeria and Yemen where finds have yet to be made, he said.

"The idea is to have a diversified portfolio,'' he said.

To secure fields, the company will offer to build refineries and pipelines in return. Indian Oil has already made such offers to Nigeria, Libya and Turkey, he said.

DOMESTIC DEMAND

The target company will have to own fields in Africa or former USSR countries

Indian Oil is scouting projects in Russia, Kazakhstan, Iran to meet fuel demand in a race with China

The company is also open to new areas which are coming up in the world oil map

India needs to find new sources of fuel as the government wants to pump up growth to 10 per cent from about 9 per cent