IVRCL eyes acquisition to foray into oil exploration
IVRCL will consider bidding in the seventh round of the National Exploration and Licensing Policy (NELP) programme, provided the acquisition is completed by then.
By R Srividhya, TNN |
HYDERABAD: IVRCL is planning to join the big league in oil exploration, possibly through an acquisition. IVRCL will consider bidding in the seventh round of the National Exploration and Licensing Policy (NELP) programme, provided the acquisition is completed by then.
“We are in talks with two companies, one local and the other outside India, in the oil exploration sector for acquisition. If it comes through in time, we will bid for the NELP VII projects,” IVRCL chairman and MD E Sudhir Reddy told ET. But, he declined to divulge the size of the target companies or the funds earmarked. “With our strong balance sheet, we can afford to acquire companies worth about $500 million,” he said.
In such acquisitions, the biggest asset would be people and the technological know-how, not physical assets. Hence valuations will not be very high, Mr Reddy asserted. Having a partner with sound experience is one of the important qualifications for bidding.
Expanding into oil and gas exploration is the next logical step for IVRCL, which has been providing infrastructure services to the sector, said Mr Reddy. IVRCL had undertaken oil pipeline laying projects for BPCL and Indian Oil Corporation.
Some of the recent oil finds in the country, by giants like Reliance Industries, Cairn Energy and GSPL, have attracted many infrastructure companies towards the sector, where opportunities like pipeline laying and city gas distribution are galore. But IVRCL is looking beyond, towards exploration.
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“We have been strong in the water transportation sector and we understand that there is not much difference between laying pipelines for the oil and water sector, except for a few technical specifications. Having been in oil and gas infrastructure services, it is only but natural for IVRCL to progress to exploration,” he says. To foray into water projects in a big way, IVRCL had in 2005 acquired Hindustan Dorr Oliver, which gave it a strong presence and expertise in turnkey projects in the domain.
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