Oil India, Gabon Hold Talks on $2B Oilfields

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October 25, 2011, 1:06 AM EDT By Rakteem Katakey and George Smith Alexander

(Updates with comment from analyst in fourth paragraph.)

Oct. 25 (Bloomberg) -- Oil India Ltd. has held talks with Gabon’s national oil company for a partnership to buy Etablissements Maurel & Prom SA’s assets in the African nation, two people with direct knowledge of the matter said.

India’s second-biggest state-run oil producer completed technical and financial assessments of the fields, which may be valued at more than $2 billion, the people said, asking not to be identified because the talks are private. Oil India and Gabon Oil Co. are yet to decide how much of the assets each will hold, the people said.

Oil India plans to spend as much as half of its 117.7 billion rupee ($2.4 billion) cash hoard to buy energy deposits overseas to meet demand in Asia’s second-fastest growing major economy. Sanford C. Bernstein & Co. and Goldman Sachs Group Inc. predict a surge of oil and gas takeovers after global energy shares fell last quarter to the lowest since December 2008.

“Oil deposits around the world are a must-have if India is to keep growing its economy,” said D.K. Aggarwal, New Delhi- based chairman of SMC Investments and Advisors Ltd. “Now would be a time to buy as oil assets will get more and more expensive in the future. Tying up with the national oil company will give them that strategic edge.”

Oil India Chairman N.M. Borah didn’t answer two calls to his mobile phone seeking comment on the discussions. Etienne Angoué, an adviser to Gabon’s mining and oil ministry, which owns Gabon Oil, declined to comment.

Maurel Output

Oil India rose as much as 1 percent to 1,304 rupees and was trading at 1,292.05 rupees at 9:43 a.m. in Mumbai. The stock has dropped 8 percent this year, less than the benchmark Sensitive Index’s 17 percent fall.

Maurel, based in Paris, hired Citigroup Inc. and BNP Paribas SA around April 2010 to search for partners for exploration permits it holds, Chief Executive Officer Jean- Francois Henin said April 1. Production from Gabon is likely to be 20,000 barrels a day at the end of the year, Henin said.

Maurel is open to considering offers for the company if they satisfy shareholder interests and give the firm a future, Henin said Sept. 1. Henin owns 24 percent of Maurel.

India’s Imports

India imported about 3.3 million barrels of crude a day in the 12 months ended March 31, equivalent to about 83 percent of the total processed by the country’s refiners, according to oil ministry data. Oil India produced 72,000 barrels a day in the period, the ministry data show.

Oil India, based in Duliajan in the northeastern state of Assam, operates an onshore oil field in Gabon, according to the company’s website. It is a partner in areas in other nations including Nigeria, Sudan, Yemen, Timor Leste and Venezuela. The company wants to buy stakes in producing fields, Finance Director T.K. Ananth Kumar said Oct. 19.

Oil India is in talks to buy a stake in Maurel’s Gabon assets, three people with direct knowledge of the matter said July 20. Maurel operates nine fields in Gabon, of which five are producing, according to the company’s website.

Asian companies are likely to spend $150 billion over the next five years on assets to secure energy supplies, according to Bernstein.

--With assistance from Antoine Lawson in Libreville. Editors: John Chacko, Amit Prakash

To contact the reporters on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net; George Smith Alexander in Mumbai at galexander11@bloomberg.net

To contact the editors responsible for this story: Amit Prakash at aprakash1@bloomberg.net; Philip Lagerkranser at lagerkranser@bloomberg.net

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