HPCL eyes Europe, Far East for E&P buy

Mumbai, March 21 | Updated: Mar 22 2006, 05:30am hrs
In a bid to strengthen its international exploration and production (E&P) activities, the Rs 65,000 crore state-owned Hindustan Petroleum Corporation Limited (HPCL) is planning to acquire a mid-sized E&P company overseas, possibly in the United Kingdom (UK). HPCL has already initiated discussions with the E&P companies in Europe and the Far East and the deal is likely to be finalised by the end of this calendar year. HPCL has set aside $1 billion for investments in the E&P segment, including acquisitions.

Confirming the development HPCLs chairman and managing director, MB Lal, told FE, "We are in discussions with E&P companies in Europe and the Far East to acquire them, though nothing has been firmed up yet." He, however, did not mention the names of companies HPCL is in talks with.

When asked about funding the overseas acquisition, HPCLs director finance C Ramalu said, "Funding will not be an issue for us. We will use funds from the $1 billion we have allocated for the E&P sector. We may also raise funds as and when required."

Analysts commented the move will help HPCL to scout for oil equities overseas through the acquired company, while HPCL can continue to focus on its core downstream activities like refining and marketing. UK is the largest producer of crude in the European region, followed by Denmark, and other countries such as Italy, Germany and the Netherlands.

The war chest: HPCL sets aside $1 billion for the E&P segment
The spin-offs:The move will help HPCL's hunt for oil equities overseas
IOC, GAIL also for global acquisition in E&P sector
Apart from HPCL, oil and gas majors Indian Oil Corporation (IOC) and GAIL are also scouting for international acquisition in the E&P sector. IOC is in talks to acquire a French E&P company, while GAIL is in process of completing its due diligence for acquisition of an overseas E&P company by April this year. The fiscal 2006-07 may witness three major acquisitions by Indian oil & gas majors in the E&P segment, which will give these companies the critical edge to aggressively foray into the international E&P market.