Gulfsands acquisition falls through for Oil India

Vol 13, PW 5 (13 Aug 09) People & Policy

This is the kind of news Oil India would have preferred to keep quiet in the run-up to its IPO listed for September 7.

Just days before the government prepares to reduce its stake in the junior state-owned explorer, PETROWATCH learns that together with Indian Oil, its partner for overseas acquisitions, the two companies lost a major overseas acquisition opportunity that could have boosted sentiment as Oil India prepares to offload 10% to the public. Except that the intended $2.23bn target was not, as Indian newspapers incorrectly reported on July 29, UK-based Gulf Keystone, but a little-known UK company called Gulfsands Petroleum, with an impressive E&P portfolio in Syria, Iraq and the Gulf of Mexico.

“IOC and Oil India submitted a â€کnon-binding’ bid to Gulfsands in early July,â€‌ confirms an industry source. “But their bid was too low.

â€‌ A senior public sector source adds: “There is nothing to talk about it. The deal is not happening.

They (Gulfsands) were asking for too much.â€‌ Most observers were dumbfounded over earlier reports that Oil India and IOC were bidding for Gulf Keystone, incorrectly as it now turns out.

“I could not believe it,â€‌ said one. “Gulf Keystone has assets only in Algeria and Kurdistan.

It is not worth $2.23bn.â€‌ By contrast Gulfsands has stakes in 44 oil and gas blocks in shallow water offshore Texas and Louisiana, of which 30 are producing.

Gulfsands also has interests in an onshore gasfield in Texas. Richard Malcolm, CEO of Gulfsands, told this report in a phone interview from London that the company’s share of oil production from its assets stands at 8250 b/d.

“We get 50% of 14,500 b/d from Block 26 in Syria and around 1000 b/d from our assets in the Gulf of Mexico.â€‌ Malcolm declined to comment on the offer from Indian Oil and Oil India.

“Submitting a non-binding bid and then offering a â€کfirm’ bid are two different things,â€‌ said another industry source. “I was sceptical about this deal from the beginning.