Indian Oil Corporation may have to put its plans for acquiring an exploration and production company on a backburner due to high international oil prices.
"Indian Oil plans to defer its acquisition of an E&P company, until the prices stabilise. With prices so high, buying a stake in the exploration company will prove very expensive for us," an Indian Oil executive said.
However, even the previous efforts of Indian Oil for acquiring an E&P company have not been successful. Indian Oil had submitted bids for acquiring Canadian company Niko Resources and French company Maurel and Prom, but has not heard from either.
The company executive indicated that Niko Resources was now out of the picture as Indian Oil had put in the request last year and had not received any response yet.
Indian Oil has been trying to acquire another company involved in upstream operations since 2004. In February 2004, Indian Oil board had accorded "in-principle" approval for pursuing acquisition of a medium-sized overseas E&P company. Previously, the company had also put in an unsuccessful bid for acquiring Indonesia's PT Medco.
Though its acquisition plans had been deferred, Indian Oil's exploration plans would not be hampered, the executive indicated.
It already has Oil India as a partner for many of its ventures into the upstream sector and plans an investment of $2-3 billion in acquiring oil equity along with OIL in the next few years. It targets having 5 million tonne equity crude by 2010-11. Indian Oil will also bid in the sixth round of the National Exploration Licensing Policy. It will also bid for the third round of the coal-bed methane exploration.
"We are in talks with some Australian companies for tying up for this round," the executive said. The company has secured interests in 11 blocks through NELP-I, NELP-II and NELP-III.In addition, it has a 27 per cent stake in an onshore block in the Assam-Arakan basin and a 35 per cent interest secured in a block in Cachar in Assam from Premium Oil.