Oil India to start exploration in KG block in Aug

Moneycontrol Bureau

State-run Oil India has plans to fund its recent Mozambique block buy via debt, a top official said today. The firm has last week acquired 4 percent stake in Rovuma Area 1 block off Mozambique’s coast from the Videocon Group for around USD one billion.

The firm's board has also approved setting up of an overseas subsidiary which will look after foreign businesses the company has or is likely to acquire in future. 

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The company is also keen to up output from its Venezuela blocks to 90,000 bpd by 2015 from the current 2,300 bpd, said SK Srivastava, chairman and managing director, Oil India.

Back home, the firm intends to drill first well in KG on-land block in August and subsequently 12 more such blocks will be taken up, he further added.

Along with its partner GeoGlobal Resources, Barbados, Oil India has already invited global Expression of Interest (EOI) from interested contractors with relevant experience for its exploratory drilling campaign in the block.

The company has lined up a capex of over Rs 3.50 lakh crore for the current year.

Meanwhile, on the latest gas price hike, an official of Oil India said that now since the gas price has almost doubled to USD 8.4 per metric will boost investment in the sector.

At the same time, he added that though firms are talked about reaping benefits of the gas price hike but in reality they may not reap huge profit. "There are chances that the government may increase our subsidy burden, reducing our savings," he said.

Currently upstream companies are mandated to partly compensate oil retailers who fuel at government rates.