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Ministry brass to meet PE firms in Mumbai-III: Indian assets have
Oct 26: "There is scope for investment in Indian oil & gas assets", one PE investor told this website.
8For one, he said, Indian onland oil and gas could be produced at a low cost. Cairn Energy, for example, has one of the lowest cost of production in the world.
8Some small yet independent onland E&P players also have good assets but they are too small to attract any meaningful PE interest.
8Of interest could be the big ticket KG Basin gas discoveries.
8Despite the fact that these are deepwater high pressure, high temperature assets, where investments are high, the big point of attraction is the price that produced gas can elicit from the KG Basin.
8The gas price will be equivalent to the landed price of LNG, and if the cost of production can be kept economical enough, there is the possibility of a good premium on this output.
8However finding willing sellers may be difficult. ONGC can do a dilution, perhaps, of its KG Basin assets if they are hived off into an independent entity.
8As for RIL or BP, they may perhaps not be willing to sell. BP may want to bring down its stake in the KG Basin but that may not be all that simple to do. Any valuation will have to be benchmarked against the whopping $7 billion paid to RIL for a 30% stake plus the accompanying expenditure that the multinational has incurred subsequently. No PE company will be willing to pay an equivalent price. Not for now.
8Will PE outfits be interested in raw acreages now being given out under OLAP? Not really. PEs are rarely interested in exploration blocks. They only go for those where assets can be monetized.
8In this context, it will be interesting to know what are the exact reasons why the entire top brass of the petroleum ministry is keen on a private session with PE investors followed by one-on-one meetings.
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