IOC, OIL to partner in asset bidding projects

Oil India Ltd. (OIL) and Indian Oil Corp. (IOC) are planning to establish a 50:50 special-purpose vehicle (SPV) to jointly bid on oil and gas acquisitions abroad, and, adopting a two-model approach to acquiring assets, they also may bid on other assets as a consortium.

Shirish Nadkarni
OGJ Correspondent

MUMBAI, May 17 -- Oil India Ltd. (OIL) and Indian Oil Corp. (IOC) are planning to establish a 50:50 special-purpose vehicle (SPV) to jointly bid on oil and gas acquisitions abroad, and, adopting a two-model approach to acquiring assets, they also may bid on other assets as a consortium.

"While the proposed SPV will look at producing from discovered assets, the consortium could pick up equity stakes in exploration assets," said OIL's chairman and managing director M R Pasrija. "Keeping both options open will be beneficial for both of us, as we would not be restricted. A decision on whether to acquire a particular asset through the consortium approach or through the SPV route can be taken on a case-to-case basis."

As a consortium, the OIL-IOC combine currently is allowed to invest up to 3 billion rupees ($74 million) after seeking board and governmental approvals for acquiring assets. In keeping the consortium option open, either company could consider acquiring other partners for assets in which its partner was not interested.

"Apart from expediting the acquisition process, the SPV route would allow the companies to approach any prospective sellers as a single entity," said a Mumbai-based industry analyst.

The OIL board has given in-principle approval for the SPV, and the IOC board, under Chairman and Managing Director Sarthak Behuria, is expected to vote on the matter soon.

Details such as the SPV company name, headquarters, and capital base have not been finalized.

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