Prize to become fully-owned HPCL subsidiary

Vol 14, PW 18 (10 Mar 11) People & Policy

Prize Petroleum could soon be back in the arms of its state-owned parent Hindustan Petroleum.

“We will move a resolution in our next board meeting to completely take over Prize,” says HPCL chairman and managing director S. Roy Choudhary, speaking exclusively to PETROWATCH.

“Prize will be run as a fully owned subsidiary of HPCL.” HPCL holds 50% in Prize while 45% is held by ICICI bank and 5% is held by HDFC bank.

Both ICICI and HDFC have wanted to sell off their respective stakes in the company for nearly two years, and Choudhury blames them for holding back the company’s development, as they “were not infusing funds” for its activities. Choudhary believes Prize’s luck and profile will improve dramatically once HPCL buys up the ICICI and HDFC stakes to secure full control.

HPCL’s first step after the planned takeover, we learn, will be to consolidate its own exploration and production activity by transferring the non-operating stakes it holds in 23 exploration blocks to Prize. This will end confusion about HPCL’s dual presence in the E&P sector, through Prize and on its own.

HPCL will also boost its presence in E&P by investing Rs3000cr ($666m) in the business over the next five years, channelled through Prize, adds Choudhary. As Prize already has the coveted tag of ‘operator’, the takeover will help HPCL leapfrog fellow state-owned companies IndianOil and Bharat Petroleum who are traditionally seen as more aggressive E&P players.

“We will leverage Prize’s operator status to acquire more properties in India and overseas,” proclaims Choudhury. “But of course our overseas acquisitions will be through a consortium (led by Prize).

” Prize was set up over 10 years ago, but operates just one NELP-IV block and two marginal fields in India.