The Hindu Business Line : IOC wants stake in ONGC Videsh

INDIAN Oil Corporation (IOC) has asked the Union Government to give the company a "good stake" in ONGC Videsh Ltd, the subsidiary of ONGC that invests in oil ventures abroad.

IOC's Chairman and Managing Director, Mr M.S. Ramachandran, told Business Line that the company would like to be fully vertically integrated "so that we are in the business from drilling to dispensing." To do this, the company must get into exploration and production of oil and natural gas.

However, the potential for oil and gas production within the country is limited. IOC is indeed active in oil prospecting and production. The company decided to acquire a 35 per cent stake in the Cachar oil and gas block in Assam from Premier Oil of UK.

But the potential for producing oil and gas in the country is still very limited. Therefore, IOC needs to go worldwide, perhaps, by buying stakes in oil companies abroad.

But being a government-owned company, any proposal of IOC to invest abroad will have to be cleared by the Cabinet, which takes time.

For ONGC Videsh, the Government has set up an Empowered Committee of Secretaries, which has the same powers as the Cabinet. The committee can clear ONGC Videsh's overseas investments proposals.

IOC has therefore told the Government that the company should either be given a similar mechanism or "give us a good stake in ONGC Videsh," Mr Ramachandran said.

Recently, ONGC Videsh took over a 25 per cent stake in the Greater Nile development project of Sudan, from a Canadian company called Talisman Energy. The Empowered Committee had decided that 40 per cent of the stake should be given to IOC, "but that has not happened yet," Mr Ramachandran noted.

Meanwhile, IOC is negotiating for a stake in an Iranian petrochemical company, the CMD said.

The Iranian company is setting up a naphtha cracker unit in Iran. A decision is expected to be reached in a couple of months.