OIL says its acquisition of NRL shares will ensure energy security of India

GUWAHATI: Oil India Limited (OIL) on Tuesday said its acquisition of shares of Numaligarh Refinery Ltd (NRL) in Assam will be a synergy for mutual growth, ensure energy security of the nation, besides partially mitigating the effect of volatility of crude price cycle.

Bharat Petroleum Corporation Ltd on March 25 sold its entire 61.5 per cent stake in NRL to a consortium of OIL and Engineers India and the Assam government for Rs 9,876 crore. OIL bought a 54.16 per cent stake to raise its shareholding in the refinery to 80.16 per cent.

Addressing a press conference here, OIL CMD and NRL Chairman Sushil Chandra Mishra said that for OIL, the majority acquisition of shares of NRL is not only a strategic business decision but one of the defining moments of its journey as an exploration and production (E&P) company looking for vertical integration in the oil and gas value chain.

The acquisition is likely to partially mitigate the effect of volatility of crude price cycle due to diversification of cash flows, reduce earnings volatility and enhance shareholder value, said Mishra.

At the same time, NRL also now has become part of an integrated energy company and OIL and NRL together can create a tremendous synergy that will help both the entities to consolidate their business plans and achieve sustainable growth and success in all their endeavours, he said.

With the massive refining capacity enhancement project of NRL and exploration plans of OIL in existing and new hydrocarbon blocks in the Northeast, the combine will be able to contribute immensely in ensuring energy security of India and achieve the targets set by the Ministry of Petroleum and Natural Gas under North East Hydrocarbon Vision 2030, he said.

OIL produces around 7-8 million metric standard cubic meters per day (MMSCMD) of natural gas (NG) in the North East region and supplies one MMSCMD of it to NRL, Mishra said.

OIL is currently operating the Naharkatiya-Barauni crude pipeline as well as Numaligarh-Siliguri Product Pipeline, he said.

"The central government and the state government have laid huge emphasis on Act East Policy with a focus on creating long lasting business relations with the neighbouring countries on the North Eastern frontiers of our country. We will be able to play a pivotal role in contributing towards fulfilling this vision," Mishra said.

NRL Managing Director S K Barua, who was also present at the press conference, said that the refinery is executing a cross-country crude pipeline of 1,630 km in length which will traverse through five states - Odisha, West Bengal, Jharkhand, Bihar and Assam.

The company has already ventured into upstream oil exploration partnering OIL as the operator in two oil blocks (Namrup and West Mechaki) earmarking an investment of around Rs 90 crore in the two blocks, Barua said.

OIL and NRL are also the promoters, holding 20 per cent shares each in Indradhanush Gas Grid Limited (IGGL) which will set up an NG pipeline connecting all the state capitals of the Northeastern region, he added.