 "Sun Petrochemicals further expands into oil and gas space")
Niko Resources has signed an asset purchase agreement with Sun Petrochemicals, divesting its operating interest (33 per cent) in the Hazira field, the former has said.
“The sale is subject to various approvals, including from the Government of India and Niko’s joint operating partner in the Hazira field, Gujarat State Petroleum Corporation,” stated Niko.
The purchase marks Sun’s further presence in the oil and gas sector. Its officials would not comment for this report.
On the rationale, Niko added, “(We do) not consider the operations from Hazira to be material, as the field was nearing the end of its life and an abandonment programme was being planned for the near future.”
This is not the first divestment Niko has embarked upon in the Indian oil and gas sector. “After consideration of favourable developments with respect to natural gas pricing applicable to the company’s undeveloped deep water fields in India, we have now re-launched the sales process for our interest in the D6 block,” it had said in its results announcement for the September quarter. Niko holds 10% stake in the block (which is in the Krishna-Godavari basin), with Reliance Industries and BP the other partners.
As Niko plans its exits, the Dilip Shanghvi (pictured) -promoted Sun Petrochemicals placed bids last month for seven oil blocks -- five in Gujarat and two in the Mumbai offshore. These are among the 67 small and marginal ones put for auction by the central government. Sun has expanded its interest in oil and gas over the past two years.
Niko did not disclose the value at which the purchase agreement was signed. “There could be various reasons for Sun’s interest in a block, including strategic, where it gets more leeway to bid for future oil and gas blocks. In the past, there have also been instances where, with newer technologies, blocks have shown extended potential. It is difficult to comment without knowing the technical details,” said an analyst, who did not wish to be identified.
Last March, Sun had signed a deal for transfer of Interlink Petroleum's interest in the Modhera and Baola oil and gas fields in Gujarat. Both were awarded under the New Exploration Licencing Policy. It also signed agreements with Triumph Oil and Gas Operating Company of the US and Loyz Oil of Singapore for joint bidding and acquisition of blocks on a farm-in/joint venture basis and for technical collaboration.
“Sun has been smart to enter the sector at a good point of time in terms of crude oil prices,” added the analyst.
