GAIL eyes smaller firms overseas for acquisition

GAIL India Ltd is looking to acquire small and medium sized companies in Oman, Malaysia, Australia, Qatar and Abu Dhabi to bring in expertise in areas like reservoir engineering and geo-physics to enable it to undertake exploration work, said GAIL India Chairman and Managing Director Prashanto Banerjee.

"We are looking at bringing expertise. It is not technology transfer, which will add to our competence profile in exploration and production," Banerjee said at the 21st Annual General Meeting of the company on Wednesday.

It has participation interest in 12 exploration blocks, but has not begun work. "In order to undertake operating position in these areas, we will acquire companies," said Banerjee. He said bankers have already been sounded off and proposals were being received.

The company planned to use its cash surplus to fund these acquisitions. "In 2006-07, Gail India can undertake investments to the tune of Rs 3,000 crore. Expansion on account of petrochemicals is slated to be Rs 600 crore," Banerjee said. The oil and gas company reported a net profit of Rs 1,954 crore in 2004-05, an increase of 43 per cent over the previous year's figure.

Consortium partners with GAIL in above blocks are ONGC, Gujarat State Petrochemicals, Gazprom, OIL, IOC, Hardy Exploration & Production, Enpro Finance Private and Daewoo International.

Banerjee also said the subsidy burden on account of sale of oil products was Rs 320 crore in the first half of this financial year. Of this, Rs 167 crore was the liability in the second quarter and Rs 153 crore in the first quarter.

Of the total subsidy burden, kerosene accounted for Rs 220 crore and liquefied petroleum gas the remaining. The annual subsidy burden of Gail India in 2004-05 was Rs 1,137 crore.

He added that India's vote against Iran at the International Atomic Energy Agency (IAEA) would not jeopardise the existing projects from Tehran, which include the proposed $7.4 billion Iran-Pakistan-India gas pipeline.

In response to a question on whether India's vote against Iran at the International Atomic Energy Agency (IAEA) could jeopardise the existing projects from Tehran, he said the company had not received any communication from the National Iranian Oil Co (NIOC).

NIOC is yet to ratify the deal struck in June 2005 to import 5 million tonne of LNG per year beginning 2009-10. "Major European MNCs have a stake in Iran, it is unlikely that deal will fall through," he said.

Earlier, petroleum minister Mani Shankar Aiyar had said that the proposed $7.4 billion Iran-Pakistan-India gas pipeline from Tehran would not be affected by the Iran vote.