IOC puts up $2 billion for foreign buy

Niko, Cairn, Tullow, Premier on list.

Indian Oil Corporation (IOC), the country's largest refiner, has put up a war chest of $2 billion for acquiring a medium-sized foreign oil firm to set up its own exploration and production division.

On IOC's radar are firms like Niko Resources of Canada, Cairn Energy Plc, Tullow Oil and Premier Oil (all of the UK) among others. "A proposal for setting up an exploration and production subsidiary is listed for approval at the company's board meeting on April 28," sources said.

After the board approval, IOC, which commands 60 per cent of the petrol retail market in India and owns half of the 115 million tonne refining capacity in the country, will go scouting for an exploration and production firm that will help it become a fully integrated company.

IOC aspires to acquire oil and gas fields through the subsidiary to cut dependence on imports to meet its crude oil requirement. Sources said the move came in the wake of the government turning down the request for splitting the country's flagship overseas investment firm ONGC Videsh Ltd.

"A subsidiary will not clash with the government decision as ONGC Videsh will continue to be the flagship acquisition vehicle in the government-to-government deals, while IOC's exploration and production division will venture into taking over private firm's stakes," they said.

IOC is looking for a medium-sized foreign firm with expertise in oil and gas exploration and production. "The company wants the best of professionals to stand tall against ONGC Videsh," sources said.

The government has also ruled out creating another ONGC Videsh with Gail, IOC, Bharat Petroleum and Oil India as promoters saying it didn't want two Indian companies to compete for the same property.