IOC to buy stake in Nigeria refinery

Indian Oil Corporation (IOC), the country's largest downstream company, has major plans for Nigeria, the world's eighth largest exporter of crude oil.

The Fortune 500 company is in talks with the Nigerian government to buy a stake in the 6 million tonne per annum (mtpa) state-owned refinery at Port Harcourt in Nigeria, besides planning to set up a greenfield refinery in the country.

"IOC has always been interested in the downstream sector in Nigeria. We are considering a refinery proposal by them," Nigerian Oil Minister Edmund Daukoru told reporters after meeting his Indian counterpart Murli Deora today.

Daukoru is also the president of the 10-member Oil Producing and Exporting Countries (Opec).

Nigeria had targeted to refine 40 per cent of its crude oil production domestically in 2007.

"That doesn't seem like a realistic target now. Maybe by next year we can achieve that and then target refining 70 per cent of our production by 2010," Daukoru said. IOC is looking to cash in on this target set by Nigeria.

Nigeria imports 30 per cent of its petroleum products requirements.

Daukoru said Nigeria was planning four greenfield refineries. "There is an entry window. Our production is not infinite and so we want Indian companies to take opportunity and get involved with refining oil," he added.

IOC had previously proposed to set up a 6 mtpa refinery in Edo state of Nigeria, provided the company was allocated an oil block.

"Our proposal still stands and we would be interested in building one of the four new refineries being planned by Nigeria if we get an oil field," IOC chairman Sarthak Behuria said.

Daukoru said Nigeria may consider allocating oil blocks on nomination basis, that is without going through the bidding process to an Indian company.

Previously, it had allocated two blocks to ONGC-Mittal Energy on nomination basis and may extend the same dispensation to either IOC or Oil India.

He added the IOC-OIL consortium had also expressed interest in bidding for the next round of auction of around 60 oil blocks that will be offered by the end of February 2007.

Besides, IOC is also in talks with Nigeria to set up liquefied natural gas (LNG) plants. Nigeria is also looking at Indian participation in laying pipelines and setting up fertiliser plants there.

Nigeria is also considering increasing term contract to sell crude oil to IOC to 3 mtpa from the current 2 mtpa.