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Rediff.com  » Business » IOC eyes S'pore Petroleum pie

IOC eyes S'pore Petroleum pie

June 22, 2005 16:24 IST
Indian Oil Corporation is eyeing acquisition of a stake in Singapore Petroleum company as part of its plans to become a diversified, transnational, integrated energy major.

"A financial investor with about 26.5 per cent equity stake in SPC is keen to exit by selling its entire equity to an interested party. We are in talks with the investor," a senior company official said.

Though the official did not identify the investor, industry sources said it could be ING Singapore Pvt Ltd, which as on March 2005 had 26.31 per cent stake in the firm.

The Singapore stock exchange list SPC, which has a market cap of about $1.1 billion, has 50 per cent stake in Singapore Refinery corporation's 273,000 barrels per day refinery and owns a 220,000 cubic meters capacity oil storage terminal in Singapore.

It has 39 retail outlets in Singapore with around 18 per cent market share. With strong foothold in aviation and bunkering business, SPC is a pioneer in aviation refueling business at Changi Airport, Singapore.

In addition, the company has aviation facilities at Taipei, Hong Kong and Bangkok Airports. It has 15 per cent stake in Kakap gas field in offshore Indonesia and 40 per cent in Sampang field in offshore East Java, Indonesia.

It also has 10 per cent working interest in exploration Block 102 and 106 in offshore Vietnam.

"There is a possibility of subsequently increasing the stake in SPC to the level of controlling stake and eventually gaining management control," the official said. SPC also has ownership interest in the $7-billion Trans-ASEAN gas pipeline that is to link Malaysia, Myanmar, Thailand, Indonesia, Philippines, Sumatra and Brunei.

IOC, the dominant player in refining and oil product marketing in India, is following the in-organic growth strategy, by focusing on building exploration and production assets through strategic acquisitions.

In February 2004, IOC Board had accorded 'in-principle' approval for pursuing acquisition of a medium sized overseas E&P company.

The company previously had been pursuing acquisition of French E&P firm Maurel & Prom, which had proven reserves of 98 million tonnes of oil spread over Cuba, Vietnam and Congo. It had also made an unsuccessful bid for acquiring Indonesia's PT Medco.

The official said SPC owns a small ownership stake in a 650-km gas pipeline, linking offshore gas fields in West Natuna Sea, Indonesia to Singapore and a 6 per cent effective stake in Transgasindo, which owns and operates two major gas transmission trunk lines in Sumatra.

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