Domestic oil companies' overseas plans are being put on the backburner as oil and gas asset prices skyrocketing due to crude oil touching record highs of over $119 per barrel.
Indian Oil Corporation (IOC), the country's largest crude oil refiner and marketer of petroleum products, is re-looking its plans to acquire an overseas exploration company with proven oil. IOC wanted to buy an oil-producing company to feed its growing refinery capacity in India.
"At the current crude oil prices, all oil and gas assets have become expensive. Our plans to acquire a company with proven oil reserves are not likely to fructify," said a senior IOC official.
The price of crude oil has more than doubled in the last 14 months, reaching record highs of over $119 per barrel earlier this week.
The high crude oil prices have not only pushed up the price of assets but also have been responsible for rates of rigs and oil field services doubling.
Other oil companies such as state-owned Oil and Natural Gas Corporation (ONGC), Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL) and Essar Oil were also keen on acquiring oil and gas assets overseas.
With the exception of ONGC, whose subsidiary ONGC Videsh (OVL) recently acquired stake in an oil exploration block in Venezuela, the other companies have not found anything which fit their budgets. HPCL was searching for oil and gas assets overseas along with steel baron LN Mittal-promoted Mittal Investments.
"We were looking for oil blocks primarily in Africa. But everything's just become too expensive," said an HPCL official. IOC attempted to buy French oil exploration company Maurel & Prom and Burren Energy's Congo assets last year.
But these never materialised. It had also evinced interest in buying a stake in a refinery in Edo, Nigeria.
