HPCL plans overseas acquisitions

Close on the heels of Indian Oil Corporation, India's second largest public sector refiner Hindustan Petroleum Corporation Limited has outlined plans to acquire exploration and production acreage abroad.

HPCL will shortly send its proposal to the petroleum ministry for permission to acquire exploration properties abroad through its upstream arm Prize Petroleum.

It is expected to stress the fact that overseas acquisitions will be necessary to convert the company into a fully integrated oil company. HPCL owns 50 per cent of Prize Petroleum, while financial institutions and banks hold the balance equity.

Like IOC, HPCL's proposal has also been driven by the government turning down the proposal for splitting the country's flagship overseas investment firm -- ONGC Videsh Limited.

Unlike IOC, which has in place a war chest of $2 billion for acquiring a medium-sized

oil firm to set up its own exploration and production division, HPCL is yet to decide on the size of the investment it plans for acquisitions abroad. IOC has set a target of adding 15 million tonnes of crude oil over the next five years through its upstream business abroad.

"We hope to earmark a sizable amount to be a decent player in the international market," an HPCL official said.

Oil industry sources point out that the trend of Indian oil companies jumping into the exploration bandwagon may not bade well for them.

In this manner, these companies may end up competing with each other for the same acreage, they argue.

IOC is already looking at companies like Niko Resources of Canada, Cairn Energy Plc, Tullow Oil and Premier Oil (all of the UK) for acquisitions. It plans to have its own oil and gas fields abroad to reduce dependence on imports to meet its crude oil requirements.