Millennium Post

Oil India board approves Indian Oil stake purchase

The OIL board, at its meeting on Monday, approved the proposal to buy IOC shares in an off-market trade, sources privy to the development said. The board of Oil and Natural Gas Corp (ONGC), which is to buy an equal number of shares in IOC, is yet to meet on the issue.

The government had offered a 10 per cent shareholding in IOC to ONGC and OIL at a discount of about 10 per cent to the current trading price. At a 10 per cent discount to the current price, the government's sale of 24.27 crore shares (or a 10 per cent stake) in IOC would fetch about
Rs 5,400 crore.

Sources said the final price would be decided by the Empowered Group of Ministers headed by Finance Minister P Chidambaram.

IOC shares have gained about Rs 36 apiece since 16 January, when the EGoM on disinvestment cleared the stake sale in the nation's largest oil firm through a block deal.  The EGoM had then cleared the stake sale at the current market price, plus/minus 1 per cent.

ONGC and OIL, however, wrote to the Petroleum Ministry saying they would each buy a 5 per cent stake in IOC from the government at the six-month average traded price and not at the current rate. A trade with a minimum 5 lakh shares or a minimum value of Rs 5 crore executed through a single transaction on a separate window of a stock exchange constitutes a block deal.

A block deal order for a scrip should be within a range of 1 per cent from the ruling market price (last traded price). ONGC currently holds an 8.77 per cent stake in Indian Oil Corporation. Although the Cabinet had originally cleared the 10 per cent stake sale in IOC through an offer for sale, the Finance Ministry had to go in for the block deal route on account of stiff opposition from the Petroleum Ministry.

The oil ministry had argued that Indian Oil Corporation shares should not be sold at the current price as it did not reflect the right valuation of the company.

IOC to pay $900 mn for 10% of Petronas’ Canada LNG project

Singapore/ New Delhi:
Indian Oil Corp, the nation’s largest oil firm, will buy Malaysian firm Petronas’ 10 per cent stake in a shale-gas assets and liquefied- natural-gas (LNG) project in British Columbia for $900 million. The acquisition of stake in Progress Energy Resources Corp for 1 billion Canadian dollars ($900 million) mark IOC’s maiden entry into North America.

‘I am pleased to announce that we have finalised a further 25 percent equity participation from an Indian party and an established Asian LNG buyer,’ the Malaysian state firm’s president and chief executive Shamsul Azhar Abbas said at the LNG Supplies for Asian Markets conference in Singapore.

Sources said IOC is buying 10 per cent stake and the remaining 15 per cent may go to a Chinese firm. The Malaysian firm, through its wholly-owned subsidiary Petronas International Corp, had in 2011 bought Canada’s Progress Energy Resources Corp in a Canadian Dollar 5.2 billion deal to get the Altares, Lily and Kahta shale gas assets in north-eastern British Columbia.  In March 2013, it sold a 10 per cent stake in the integrated shale gas development and LNG project to Japan Petroleum Exploration Co (Japex) and 3 percent to Petroleum Brunei.

Petronas had previously announced that it plans to sell up to 50 per cent of the Canadian project. After deals with Japex, Petroleum Brunei and the latest deal for 25 per cent with firms like IOC, it now has another 12 per cent to offload. ‘We are in advanced talks with other buyers for the remaining 12 per cent,’ he said, without providing any further details.

Petronas plans to build an LNG terminal off Canada’s Pacific Coast to export natural gas to Asian markets. Progress Energy has 1.9 trillion cubic feet of proved and probable gas reserves in British Columbia.
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