Indian Oil Corporation Ltd. has acquired entire 17% stake of Royal Dutch Shell for Rs. 2078 Cr. in Mukhaizna oil field in Oman.
Indian Oil is India’s largest commercial, state owned Oil and Gas company. Indian Oil owns 11 of India’s 23 refineries with a refining capacity of 80.70 MMTPA, accounting for 33 % of domestic refining capacity. The company had a turnover of Rs. 5,06,428 Cr. and a net profit of Rs. 21, 436 Cr in the year 2017-18.
This is Indian Oil’s first producing upstream acquisition in Oman, with the strategic objective of securing high-quality producing assets in line with the aim to strengthen its upstream Portfolio. In its filing at Bombay Stock Exchange (BSE) Indian Oil mentioned that it has acquired 100 % equity stake in Shell Exploration and Production Oman Ltd. from Shell Overseas Holdings Ltd. including the marketing rights for entitlement oil. This acquisition has been made by IOCL Singapore Pte. Ltd. which is a wholly-owned subsidiary of Indian Oil. The effective date of transaction is 1st January 2017.
Indian Oil Minister Dharmendra Pradhan tweeted on 5th April 2018 saying “The equity of IOC in the Oil Field will feed Indian refineries with an additional 1 Million Tonne (MT) of crude oil”.
Indian Oil – Exploration & Production (E&P)
Indian Oil has been laying emphasis on enhancing upstream integration in collaboration with consortium partners. Currently Indian Oil has participating interest (PI) in 12 overseas E&P assets. In FY 2017-18, major acquisitions were made in UAE & Oman.
This year Indian Oil’s share of 2P (proven+ probable) reserves increased by 150 million barrels of oil equivalent (MMboe) and production went up by about 12,000 Boe/day through acquisition of 3% PI in Lower Zakum Concession, Offshore Abu Dhabi. Similarly, Indian Oil’s share of 2P reserves increased by 109 million barrels of oil equivalent (MMboe) and production went up by about 19,000 Boe/day through the acquisition of 17% PI in Mukhaizna Oil Field, Oman.
Mukhaizna is a giant heavy oil development* operated by Occidental Mukhaizna LLC – a subsidiary of Occidental Petroleum Corporation in south-central Oman. It is the single-largest producing oil field in Oman contributing 120,000 barrels per day accounting for 13% of the total Omani crude oil. The field is operated by Occidental Mukhaizna LLC with 45 % stake. In addition to Indian Oil’s 17% stake, other partners includes Oman Oil Company S.A.O.C (20%), Liwa Energy Limited (15%), Total E & P Oman (2%) and Partex (Oman) Corporation (1%).
Shell has a disinvestment target of $ 30 billion, therefore continues to sell its non – core assets and this sale takes Shell a step closer to its target.
As per the press release of Shell Overseas Holding Limited on 5th April 2018, Shell Oman Country Chair, Chris Breeze said “We are pleased to assist the entry of Indian Oil, an integrated energy company with activities in oil, gas, petrochemicals and one of India’s largest companies, into the upstream sector in Oman. Shell remains fully committed to Oman’s energy future and is actively seeking to make further investments in the country.” Shell has a 30% share in Oman LNG LLC, 49% ownership of Shell Oman Marketing Company SAOG, and 34% of Petroleum Development Oman.
As per the article by ET on 6th April 2018, Indian Oil said “The acquisition also has a significant strategic importance in India, both in terms of augmenting India’s energy security as well as enhancing India’s stature in the global political and economic arenas”.
* The world’s 932 giant oil and gas fields are considered those with 500 million barrels (79,000,000 m3) of ultimately recoverable oil or gas equivalent.
Indian Oil Corporation Ltd (IOCL) is India’s flagship national oil company with business interests straddling the entire hydrocarbon value chain – from refining, pipeline transportation and marketing of petroleum products to exploration & production of crude oil & gas, marketing of natural gas and petrochemicals.
IOCL Singapore Pte. Ltd. is an investment holding company. The company was incorporated in 2016 and is based in Singapore. IOCL Singapore Pte. Ltd. operates as a subsidiary of Indian Oil Corporation Limited.
The Mukhaizna Oil Field is an oilfield in Al Wusta Governorate – Oman, operated by Occidental Petroleum.
Occidental Petroleum is an international oil and gas exploration and production company with operations in the United States, Middle East and Latin America. Headquartered in Houston, Occidental is one of the largest U.S. oil and gas companies, based on equity market capitalization.
Royal Dutch Shell plc is incorporated in England and Wales, has its headquarters in The Hague. Shell is an international energy company with expertise in the exploration, production, refining and marketing of oil and natural gas, and the manufacturing and marketing of chemicals.
This article has been written with some inputs taken from Economic Times.