No longer wanting to play a second fiddle to ONGC, Oil India Ltd (OIL) is planning an overseas investment arm on the lines of ONGC Videsh Ltd.
OIL will soon be going to its board for appropriate approvals for the proposed OIL International. The company plans to get aggressive on acquiring overseas assets, Director-Finance, Oil India, T. K. Ananth Kumar, told Business Line.
The move comes close on the heels of the recent diktat to public sector undertakings from the Finance Minister, P. Chidambaram, to make investments in India and abroad.
In fact, earlier, OIL and Indian Oil Corporation had set up a Mauritius-based special entity for acquiring oil and gas acreages overseas. But, the special purpose vehicle no longer exists, and till its closure the venture did not acquire assets. Ind-Oil Overseas Ltd, the special entity jointly floated by IOC and OIL, was to look at prospects in CIS and African countries. In 2005, the two companies got Cabinet approval to set up a project-specific Special Purpose Vehicle (SPV). The 50:50 venture was set up in 2008.
The decision to set up the entity in Mauritius was prompted by the tax benefits offered by that country .
The companies had kept the capital base in the SPV at a minimum.
However, this venture did not restrict OIL-IOC from adopting a consortium approach when required. Both IOC and OIL preferred to adopt a two-model approach to acquire oil and gas assets.
Investments
OIL has planned investments of Rs 6,000-7,000 crore for overseas oil and gas blocks this fiscal. The company will go for discovered, under development or developing oil and gas fields, he said.
Oil India is looking for assets in the US, Africa, Australia, Canada, among others.
At present, it has a presence in Libya, Gabon, Iran, Yemen, Nigeria, Egypt, and Venezuela.