Exxon and Total ignore HPCL privatisation

Vol 7, PW 1 (26 Mar 03) People & Policy
     

EXXONMOBIL AND TotalFinaElf have surprisingly decided to stay away from the impending privatisation of Indian state-owned refiner Hindustan Petroleum.

Nine companies submitted Expressions of Interest by the 17th March deadline: Kuwait Petroleum, Shell, Saudi Aramco, Reliance, Essar, Petronas, Russia's Sun Group, BP and ChevronTexaco. But Exxon and Total did not.

Both were widely expected to be among the front-runners. Exxon because it owned HPCL before nationalisation and Total because it has a successful LPG joint venture with the Indian refiner.

A source tells PETROWATCH Exxon "evaluated the opportunity carefully" before deciding. "We have a basket of investment opportunities at any time the world over," we learn.

"We match these opportunities with our corporate plans and strategic long-term objectives. HPCL does not fit in." Total is less diplomatic.

"We were very interested in HPCL but we are not confident the competition will be fair ortransparent. We also don't know what kind of barriers there will be in the market." Total thinks HPCL is overpriced.

"HSBC (the government's advisor for the HPCL sale) tells us HPCL will cost between $1.5bn and $2bn. We feel this is too high compared to its real value." Moreover, says Total, "we are not ready for this kind of investment in India now.

Conditions for entering the retail marketing sector are still too restrictive." Yet Total has not given up on India. "The retail market is huge and cannot be ignored.

At some point we will get in. But not now." As we write, HSBC and the disinvestment ministry are busy short-listing the nine companies who submitted EOIs.

"A short list will be prepared and confidentiality agreements will be signed with these companies in the first week of April," we learn.