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IOC & OIL sign pact for upstream opportunities overseas

New Delhi, Dec 8, 2004

Indian Oil Corporation Ltd. (IOC), India's downstream petroleum major, and Oil India Ltd. (OIL), a leading upstream PSU, are set to synergise their strengths and expertise in their respective domains to jointly pursue upstream business opportunities overseas as well as other related prospects in the hydrocarbon value chain.

IndianOil Chairman, Mr. M. S. Ramachandran, and the Chairman & Managing Director of Oil India Limited, Mr. R. K. Dutta, inked a pact to this effect here today. The association will equip IndianOil with the significant upstream E&P (exploration & production) expertise available with OIL, while OIL will have the backup of IndianOil's downstream refining and marketing expertise as well as financial strength. Joint participation in overseas opportunities will facilitate obtaining equity oil abroad, thereby achieving oil security for the nation. The combine intends to leverage the strong strategic relationship developed by them individually with several overseas national oil companies for mutual benefit.

Under the Memorandum of Understanding (MOU), which will be effective for a period of 10 years initially, the participating interest of IndianOil and OIL in all overseas opportunities will be equal, unless mutually decided upon on project-to-project basis. OIL will be the operator for all overseas upstream projects wherever the IndianOil-OIL combine acquires operatorship rights.

Speaking on the occasion, Mr. M.S.Ramachandran said, "IndianOil has identified vertical integration along the entire hydrocarbon value chain as a key strategy for assured growth in the future. In downstream, we have already made a success of our marketing ventures in Sri Lanka and Mauritius through two fully-owned subsidiaries, and are in the process of implementing an ambitious master plan to emerge as a major player in petrochemicals. Upstream integration through E&P initiatives would help secure our own equity oil so as to safeguard our business interests against the highly volatile international oil market."

IndianOil is already actively participating in the domestic NELP and CBM blocks in consortium with other companies, besides entering into a 'Farm-in Agreement' with Premier Oil (NE India) BV and Hindustan Oil Exploration Corporation and acquired participating interest in the on-shore exploration block in Assam-Arunachal Pradesh region. The Corporation is also acquiring 35% equity stake in the Cachar block in Assam from Premier Oil.

Both IndianOil and OIL are currently participating in oil & gas ventures abroad, individually as well as in consortium. Prominent among them is the Farsi Exploration Block in Iran which was awarded to the IndianOil-Oil India-ONGC Videsh combine. IndianOil has also formed a consortium with ONGC Videsh, British Petroleum and Occidental Petroleum to bid for the 'Northern Kuwait Oil Fields Project'. OIL has already farmed-in in Cote d'Ivoire and has taken equity in the Sudan pipeline project, while actively pursuing prospects in Syria, Sudan, etc., and jointly with IndianOil in Libya.

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