Mittal, HPCL in global oil push

Lakshmi Niwas Mittal, the world's largest steel producer, has made a big-bang entry into oil refining and production in partnership with state-owned Hindustan Petroleum Corporation Ltd (HPCL).

Mittal Investments, a company he controls, has bought 49 per cent in HPCL's new refinery at Bathinda, Punjab for Rs 3,200 crore, even as the two companies have joined hands to bid for a refinery and an oil block in Nigeria.

"He wants to get into the oil business and is making a beginning with India," Petroleum Minister Murli Deora told reporters here today.

"Financially, they're strong overseas,'' said HPCL Chairman & Managing Director Mahesh Lal, adding, "We thought we will grab them before others do."

In 2005, Mittal had tied up with Oil & Natural Gas Corporation to bid for oil blocks in Kazakhstan and Nigeria.

HPCL and Mittal Investments have also formed a 50:50 joint venture company to acquire oil blocks as well as refineries abroad. "The proposal is that HPCL will run the refineries overseas and Mittal will provide the financing," Lal said.

The joint venture company has bid for a 51 per cent stake in the Port Harcourt refinery in Nigeria and also an oilfield in the country to feed the refinery.

The two partners will also explore marketing opportunities abroad. Lal said that Mittal Investments may also invest in HPCL's refinery expansion project at Vishakapatnam and the petrochemical plant that will come up alongside.

Mittal has picked up the stake in the Bathinda refinery a year after British Petroleum pulled out of the project after signing an initial agreement. Earlier, Saudi Aramco of Saudi Arabia had exited the project in 1998.

In the event of a possible divestment of stake by HPCL in the Bathinda refinery, Mittal Investment will have the option to buy the shares at a price determined by experts. Deora said that before the completion of the refinery project, Oil India Ltd would also be inducted as a partner.

The HPCL-Mittal combine would lay a 1,100-km crude oil pipeline from Mundra port in Gujarat to Bathinda and build a crude oil terminal and associated facilities at an estimated cost of Rs 3,500 crore.

"This investment will also give Mittal a right to enter the Indian oil marketing sector. They can open their own outlets," Lal said.