OIL to invest Rs 4,500 cr in exploration

Public sector oil major Oil India Limited (OIL) has lined up an investment of around Rs 4,500 crore for the next two years.

M R Pasrija, chairman of OIL, said the amount will be spent by the company on drilling and exploration operations, both domestic and overseas, laying of pipelines and also in meeting capital requirements. OIL expects to part fund the overall investment from the proceeds of its IPO.

"The company has already filed the draft red herring prospectus with Sebi and our IPO will hit the capital markets in February next year," Pasrija told reporters on the sidelines of the 32nd regional conference of the Institute of Chartered Accountants of India.

At present, the government holds 98.17 per cent stake in OIL while the remaining stake is with employees.

Following the IPO, government's stake will drop to 78.43 per cent as 10 per cent of the stake will be divested to the general public and another 10 per cent sold to Indian Oil Corporation (IOC), Bharat Petroleum Corporation and Hindustan Petroleum Corporation.

In another development, OIL would commence drilling operations in two of its blocks in Libya by December next year.

"OIL was awarded six blocks in Libya in December this year out of which it will operate two blocks jointly with IOC. We will commence drilling in these two blocks by December next year. The company also expects to share the production sharing agreement soon for the remaining four blocks," Pasrija said.

In the remaining four blocks, 50 per cent stake is held by an Algerian company and 25 per cent each by OIL and IOC.

OIL has also one functioning block in Gabon, where it has 45 per cent stake and one in Nigeria where it holds 35 per cent stake along with IOC. It has 15 per cent stake in two exploration blocks in Yemen, which is operated by Medco Oil, a company based in Indonesia. That apart, OIL has a 10 per cent stake in a 700-km product pipeline in Sudan.

OIL is also looking for exploration opportunities on the domestic front and has planned to scale up capacity of its crude oil production.

"A bulk of our exploration activities in India will be confined to the north-east, mainly Assam and we are aiming to achieve a crude oil production of 3.5 million tonne for this fiscal, up from 3.2 million tonne achieved in 2006-07," Pasrija said.

OIL produces around 7 million standard cubic meters per day of natural gas and more than 45,000 tonne of LPG annually and most of its production comes from its traditionally rich oil and gas fields concentrated in the north-eastern region.