INDIAN OIL CORPORATION LOSES IRAN PROJECT

Vol 3, PW 12 (07 Jul 99) Exploration & Production
     

If Indian Oil Corporation still thinks it has a chance of joining a consortium for the development of the Balal oilfield offshore Iran it will be sadly disappointed.

A source at Elf Aquitaine tells this report that Elf Petroleum Iran, new operator of the Balal field, has no intention of divesting any of its newly-acquired 85% stake to IOC. "We have no intention of asking IOC to join us", a source in Paris tells this report, "We are happy to operate this field on our own with our partner".

In April this year, the UKs Premier Oil, faced with mounting financial difficulties in south-east Asia, sold its entire interest in the Balal development to Elf. Bow Valley Resources, a small Canadian oil company, holds the balance 15%.

Premiers exit from the Balal field has come as a shock to IOC. Mohammed Pathan, company chairman, regularly boasts of IOCs participation at Balal.

As late as 16 June, a newspaper article in India reported that IOC had renewed efforts to acquire government approval for its participation at Balal, blissfully unaware the opportunity had long passed. As usual, this sorry episode illustrates the ivory tower mentality of the people that run Indias oil and gas business.

There was talk of a $60m cash injection by IOC at Balal in exchange for a 35% stake. If IOC had met the initial December 1998 deadline set by Premier Oil for a firm yes or no participation at Balal, it is quite likely Premier would not have been in such a hurry to sell up.

In India, meanwhile, IOC is now left looking rather silly. This is not the first time a state-owned India company has lost acreage abroad because of slow decision-making at home.