 "Tata bid for oil blocks slipped after Cyrus exit")
The government’s efforts to get investment in oil exploration and production faced an unusual block last month.
The Tata group was to bid in an auction round for small discovered fields, through Tata Sons’ subsidiary, Tata Petrodyne. However, the fierce fight between Ratan Tata and Cyrus Mistry ensued by the time bidding closed on November 21 and the company did not participate.
On October 24, Cyrus Mistry was removed as chairman of Tata Sons. The board of directors replaced him with Ratan Tata as interim chairman. Two people privy to the development told this newspaper that Tata Petrodyne was in discussion with Simorgh Energy, promoted by Sastry Karra, former chief executive of Hardy Exploration & Production (India).
In an emailed response to a query on whether Mistry wanted Tata Petrodyne to bid but the company did not do so after recent developments in the group, a Tata Sons spokesperson said, “The information sought is internal to the company. The decisions of the company have got nothing to do with the replacement of the former chairman of Tata Sons.”
Tata Petrodyne is a fully owned subsidiary of Tata Sons Ltd. It has participating interest in eight exploration and production assets, in India, Indonesia and Tanzania. Some of these are in production stage ; the others in exploration and pre-producing stages. “The Tatas were looking for at least five-six fields in the small discovered ones’ round, in tie-up with a start-up company. Tata officials participated in the roadshows the ministry of petroleum and natural gas conducted and had tied up with Simorgh Energy. But, as Ratan Tata took charge, the company went back at the last minute, a few days before the bidding. We have been told that they were not keen on going ahead because of the change of guard,” said a source.
Senior Tata Petrodyne officials who participated in the roadshows were Atanu Guha, vice-president, finance; H C V Kumar, vice-president, technical; and Nekfar Thanawalla, in charge of corporate finance and business development. E-mails sent to Guha and Thanawalla on Monday, regarding the tie-up with Simorgh Energy, were not answered.
Karra, too, was active on the roadshows conducted by the Directorate General of Hydrocarbons. In an interactive session at Calgary in Alberta, a province of Canada, on July 18, he spoke to the dignitaries about his experience in doing business in India. Karra did not respond to a Business Standard mail sent on November 30. He has about 40 years of experience in reservoir engineering and advisory positions in the oil industry. And, has headed an oil and gas industry body in India.
Tata Industries originally promoted Tata Petrodyne in 1993 with the aim of spearheading the group's foray into the upstream sector of the oil and gas industry. The ownership of the company was later transferred to Tata Power Company, in line with the group's strategy to consolidate all its energy businesses into a single corporate entity. In March 2005, Tata Sons bought the entire stake. Apparently done as the oil and gas business required focus and large investment. During the round of auction for the small and marginal fields, of the 42 participating companies, 37 were private ones.
The 46 contract areas on offer had estimated total reserves of 88 million tonnes of oil equivalent. If these come into production, it can cut India's oil import bill by Rs Rs 3,500 crore a year. Petroleum minister Dharmendra Pradhan has indicated that the fields are likely to be allotted by the end of this month. Results of the financial bids are to be out in a few days. Among the companies were Gem Laboratories, Quippo, Oilmax Energy, Megha Engineering, Ramayana Ispat, Duggar Fiber, Nippon Power, Invenire Energy, Gopalka Savings, BDN Enterprises, Mahindra Infrastructure, Akhil Teja Natural Resources and Worldwide Oilfield.
Tata Group’s participation with Simorgh would have added to the government's effort to get start-ups into the sector. The round already had the presence of Dilip Shanghvi of Sun Pharmaceutical, through Sun Petrochemicals; Subhash Chandra’s Essel Group through Essel Group Middle East; and, the Adani Group. The bidding round that kicked off on May 25 was mainly aimed at small companies. There were 134 bids for nearly 70 per cent of the area; 67 discovered small and marginal oil & gas fields under 46 contract areas have been put for auction. Of these, 26 are on land, 18 are shallow-water ones and two are deep-water fields.
Tata Petrodyne explained
- Tata Petrodyne is a fully owned subsidiary of Tata Sons
- It has participating interest in eight exploration and production assets, in India, Indonesia and Tanzania
- Some of these are in production stage; the others in exploration and pre-producing stages
