INDIA: WEIGHT $2B
Oil India Ltd., the nation's second-biggest state-run explorer, is studying an acquisition of Nigerian oil and gas assets owned by Royal Dutch Shell, according to people familiar with the matter.
Oil India is weighing a bid for stakes Shell holds in some onshore blocks, valued at as much as $2 billion, the people said. It will partner with India's Sandesara Group on the potential purchase, according to the people, who asked not to be identified as the deliberations are private.
The explorer joins Dangote Group, controlled by Africa's richest man, and Seplat Petroleum Development Co. in seeking to acquire Nigerian assets being sold by Western rivals. Shell and Chevron Corp. are divesting fields in the country amid persistent violence and crude theft in the oil-rich Niger River delta.
India's government-run oil companies are building on their record $5.5 billion of acquisitions last year to secure supplies for Asia's second-biggest energy consumer. Oil India, which had 124.9 billion rupees ($2.1 billion) of cash at the end of September, has purchased stakes in gas fields in Mozambique and shale assets in the U.S. over the past two years.
Oil India Chairman S.K. Srivastava and finance director Rupshikha Saikia Borah didn't answer two calls each to their mobile phones yesterday seeking comment. Sandesara Group Chairman Nitin Sandesara didn't respond to an e-mail and phone call to his office.
Oil India shares slid 0.1 percent to 483.55 rupees in Mumbai yesterday. The stock has fallen 8 percent in the past year, compared with a 24 percent gain by the benchmark S&P BSE Sensex. Of 42 analysts who track the stock, 37 recommend buying and none favor selling, according to data compiled by Bloomberg.
"While Oil India's capex will increase over the next few years as the company implements its domestic exploration and development programs, and acquires and develops its overseas assets, we expect these expansion activities to be funded by a mixture of operating cash flow and debt such that Oil Inida's credit metrics will remain well within the tolerance level of its ratings," Vikas Halan, senior analyst at Moody's Investors Service, wrote in an April 2 report.
Sterling Energy & Exploration Production Ltd., a unit of Sandesara Group, has more than 250 million barrels of certified oil reserves and one trillion cubic feet of natural gas reserves in the Niger Delta, according to its website. Nigeria pumped about 2.1 million barrels of crude a day last month, data compiled by Bloomberg show.
Shell, Europe's biggest oil company, said in October divestments in Nigeria have been deferred to 2014. The Anglo-Dutch company's earnings in the country were curbed by almost $1 billion last year because of oil theft and a liquefied natural gas export blockade by the government, Chief Financial Officer Simon Henry said March 13.
Earlier this year, Oil & Natural Gas (ONGC) Corp. and Oil India paid $2.5 billion for a 10 percent stake in a Mozambique natural gas field. Securing fuel supplies is crucial for Prime Minister Manmohan Singh as India relies on imports to meet about three-quarters of its oil requirements.
Seplat Petroleum, based in Lagos, and its partners are bidding for two Nigerian oil and gas permits Shell is selling, Chairman A.B.C. Orjiako said March 11. Dangote Group is in talks to purchase onshore oil blocks in the country as international companies sell assets, Group Executive Director Devakumar Edwin said in January.
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