Oil India is weighing a bid for stakes Shell holds in some onshore blocks, valued at $2 billion, the people said. It will partner India's Sandesara Group on the potential purchase, according to the people.
The explorer joins Dangote Group, controlled by Africa's richest man, and Seplat Petroleum Development Co in seeking to acquire Nigerian assets being sold by Western rivals. Shell and Chevron are divesting fields in the country amid persistent violence and crude theft in the oil-rich Niger River delta.
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India's government-run oil companies are building on their record $5.5 billion of acquisitions last year to secure supplies for Asia's second-biggest energy consumer. Oil India, which had Rs 12,490 crore ($2.1 billion) of cash at the end of September, has purchased stakes in gas fields in Mozambique and shale assets in the US over two years.
Chairman S K Srivastava and Finance Director Rupshikha Saikia Borah didn't answer two calls each to their mobile phones on Friday. Sandesara Group Chairman Nitin Sandesara didn't respond to an e-mail and phone call to his office.
'Within tolerance'
Oil India shares slid 0.1 per cent to Rs 483.5 in Mumbai on Friday. The stock has fallen eight per cent in the past year, compared with a 24 per cent gain by the benchmark S&P BSE Sensex. Of 42 analysts who track the stock, 37 recommend buying and none favour selling, according to data compiled by Bloomberg.
"While Oil India's capex will increase over the next few years as the company implements its domestic exploration and development programs, and acquires and develops its foreign assets, we expect these expansion activities to be funded by a mixture of operating cash flow and debt such that Oil Inida's credit metrics will remain well within the tolerance level of its ratings," Vikas Halan, senior analyst at Moody's Investors Service, wrote in an April 2 report.
Sterling Energy & Exploration Production, a unit of Sandesara Group, has 250 million barrels of certified oil reserves and one trillion cubic feet of natural gas reserves in the Niger Delta, according to its site. Nigeria pumped 2.1 million barrels of crude oil a day last month, data compiled by Bloomberg show. Shell, Europe's biggest oil company, said in October divestments in Nigeria had been deferred to 2014. Earnings in the country were curbed by $1 billion last year because of oil theft and a liquefied natural gas export blockade by the government, Chief Financial Officer Simon Henry said on March 13.
Earlier this year, Oil & Natural Gas Corp. and Oil India paid $2.5 billion for a 10 percent stake in a Mozambique natural gas field. Securing fuel supplies is crucial for Prime Minister Manmohan Singh as India relies on imports to meet about three- quarters of its oil requirements.
Seplat Petroleum, based in Lagos, and its partners are bidding for two Nigerian oil and gas permits Shell is selling, Chairman A.B.C. Orjiako said March 11. Dangote Group is in talks to purchase onshore oil blocks in the country as international companies sell assets, Group Executive Director Devakumar Edwin said in January.
WEIGHING A BID
* Oil and gas assets owned by Royal Dutch Shell
* $2 bn value of stakes Shell holds in some onshore blocks that Oil India is weighing to bid for
* Sandesara Group: will be partnered for the potential purchase
* $5.5 bn acquisitions last year by state-run oil companies