Hindustan Petroleum Corporation Ltd, India’s third-largest downstream oil company, plans to invest Rs 750 crore in exploration and production in the next three years.
Hindustan Petroleum Corporation Ltd (HPCL), India’s third-largest downstream oil company, plans to invest Rs 750 crore in exploration and production in the next three years.
The company is also keen on picking up stakes in discovered and developed oil wells across the world to increase its upstream asset base rapidly.
“We don’t have any target on the exploration and production front, but would look at acquiring more and more developed blocks,” a company official said requesting anonymity.
He said, of the $400 million investment earmarked by HPCL for the Eleventh Plan period, $250 milllion has already been spent. “The remaining will be spent in the next three years.”
The company currently has an asset base of 26 blocks, of which 22 are in India. The overseas assets include two blocks in Egypt and one each in Oman and Australia.
Most of these blocks are in initial stages of development, with one in Gujarat expected to start production in late 2010.
“We are not expecting any substantial contribution form the block, but that will at least give the company its first flow of oil,” the official said.
For the next few years, the company has changed its focus to exploration and production, keeping in view the low oil prices and lacklustre upstream activity the world over.
“Currently, the value of upstream assets world over has come down substantially and this is the right time to acquire them,” the official said.
Going by him, HPCL has identified six regions where it would pick up stakes in oil and gas assets in fields marginally or fully developed. These are western and northern Africa, Kazakhstan, Azerbaijan, Indonesia, Vietnam and Australia.
According to Murali, at current levels of crude, HPCL’s gross refining margins (GRMs) are 10-15% over the Singapore benchmark GRMs.
Bhatinda refinery kick-off in 2011
The refinery being set up by HPCL in Bhatinda, its third after Mumbai and Vizag, is expected to come on stream in the first half of 2011.
K Murali, director - refineries, HPCL, said, “The date of commissioning of the refinery has been revised from 42 months to 39 months and we are very much on schedule.”
The total cost of the project is Rs 18,000 crore, of which close to Rs 12,000 crore has already been committed, said Murali.
The refinery, which will have a total capacity of 9 million metric tonnes per annum, is jointly held by HPCL and Mittal Energy, the energy investment arm of steel baron L N Mittal.
Murali said expansion of the Vizag refinery and petrochemical plant is still on hold because there is no demand revival. The expansion work at the site was put on hold in December last year as demand for petroleum products went down.
Also, he said, with the release of gas from the KG basin, the company’s naphtha sales have taken a hit in the domestic market and it is now looking at converting it to motor spirit, commonly called as petrol.
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