BPCL, Videocon rally on gas find in Mozambique

The gas hunt in the oil-rich Rovuma Basin in Africa’s Mozambique promises good tidings for government-run oil refiner and marketer Bharat Petroleum Corporation (BPCL) and energy-to-consumer durables firm Videocon Industries, but the final potential will be known only when commercial production starts by 2017.

On 11JUN12, both companies said Texas-based Anadarko Petroleum, which operates oil blocks in the deep-water Rovuma Basin, announced new natural gas discovery in Offshore Area 1 of the basin, which has an estimated recoverable gas resource between 30 and 60 trillion cubic feet (tcf).

In comparison, the KG-D6 block of Reliance Industries has 3.67 tcf of reserves, RIL said in its annual report for the 2012 fiscal.

Videocon and BPCL hold 10% each in six blocks in the Rovuma basin through their wholly-owned subsidiaries Videocon Hydrocarbon Holdings and Bharat Petro Resources (BRPL).

BPCL, which, like other government-run refiners, make huge losses by selling petrol, diesel and cooking gas below cost, is aiming to de-risk its business through its oil and gas exploration foray and double its profits by 2017.

The company, which also owns minority stakes in oil and gas fields in Brazil and Indonesia, had said that gas will flow from Mozambique by the 2018 fiscal. “It is a matter of five years for BPCL,” RK Singh, chairman and managing director, BPCL, had told FE in an earlier interaction. “When oil and gas assets abroad start giving results, the upstream company will start supporting BPCL.”

BRPL’s 10% stake in Mozambique field gives it right to sell 3 tcf of reserves. “The huge revenue stream coming from that side will change BPCL’s complexion,” Singh, who took over the reins in December 2010, said. BRPL owns 27 blocks, of which, 10 are in Brazil, eight spread across Australia, Timor, Indonesia, Mozambique, Oman and the North Sea and nine are in India.

Meanwhile, Videocon, whose desperate turn for survival in the mid-1990s transformed it into an energy giant, is expecting three-fourths of its revenues to come from the oil & gas business. Prolific energy fields abroad have helped the group rely progressively less on televisions, washing machines and electronic components, a business under threat from multinational corporations.

IE 12JUN12

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