IOC, Oil India in pact for overseas projects

Moving one step closer to a long-term association and possible acquisition of the Oil India Ltd (OIL) by the Indian Oil Corporation, the two companies today reached an understanding for equal partnership in all overseas upstream projects.

OIL would have the operatorship rights in the projects where the combine was granted such rights.

The memorandum of understanding (MoU) signed by the two companies would also extend to the downstream business of refining and marketing, in which the IOC is the leader in the domestic market.

The partnership would include joint bidding for domestic blocks to be put on offer by the government under the new exploration and licensing policy.

The MoU was signed between IOC chairman MS Ramachandran and OIL chairman and managing director R K Dutta.

"IOC has identified vertical integration along the entire hydrocarbon value chain as a key strategy for assured growth in the future," Ramachandran said on the occasion.

The MoU, effective for 10 years, would entail equal participation from both the companies in overseas opportunities unless mutually decided upon on a project-to-project basis.

Officials said the IOC-OIL joint venture would concentrate on acquiring small and medium sized oil and gas properties abroad as part of the consolidation while ONGC Videsh Ltd, the Oil and Natural Gas Corp's arm for overseas investment, would focus primarily on taking over big investment properties.