Maurel & Prom agree to revise sale conditions to IOC

Vol 9, PW 21 (09 Feb 06) People & Policy

Indian Oil and Oil India are quite close to buying out Maurel & Prom of France, despite denials from Paris and Delhi.

PETROWATCH learns both sides have significantly narrowed down their differences on commercial aspects of the deal. Confirmed information is understandably scarce because both sides are sensitive to any press leaks that could jeopardise the deal.

Still, we understand that the amount Indian Oil and Oil India are willing to pay for the French explorer is much less than what is being reported in the Indian press. On 27th January, the Indian Express from Delhi said IOC and Oil India are ready to pay 2.3bn Euros for a 40% stake in Maurel & Prom and that a Share Purchase Agreement is imminent a claim vociferously denied the next day in a statement from the company in Paris.

Maurel & Prom deny having received any takeover bid on Maurel & Prom shares, said the company. However, it admitted that, Maurel & Prom has recently received several marks of interest, which have not been considered meaningful and as such did not warrant a communication to the market.

Furthermore, the company ascertains that no exclusivity rights have been granted. Something is clearly going on and reliable sources tell us negotiations between both sides are still underway.

Crucially, it seems Indian Oil and Maurel & Prom have tentatively agreed to revise the modalities of the emerging deal because of unwillingness by the Indian side to pay the high price demanded by the French company. In response, Maurel & Prom has made it clear that if it reduces the asking price it would have to include some futuristic conditions.

According to the proposed changes, Indian Oil and Oil India would make a direct payment to buy a stake and also commit to future payments that reflect certified reserves upside or significant future discoveries disclosed after the deal is done. Indian Oil and Oil appear ready to accept this formula, but approval is awaited from the boards of both companies.

If the deal goes through, most analysts expect Oil India to assume operatorship of Maurel & Proms overseas assets given Indian Oils relative lack of upstream experience.