Oman Oil picks up 26% stake in BPCL refinery project

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In an interview with CNBC-TV18, SK Joshi, Director of Finance of Bharat Petroleum Corporation Ltd (BPCL) spoke about the latest happenings in his company and sector.

Below is a verbatim transcript of the interview. Also watch the video.

Q: Can you tell us about the oil find and what it might mean for BPCL?

A: This is about the Wahoo-2 well, which is a composed basin as in Brazil BPCL has interesting 10 exploratory blocks and last Monday our operator Anadarko have made announcement that in Wahoo-2 also they have encountered oil and about 90 feet plus net pay oil they have encountered. The significance of this oil is that as you are aware last October '08, Wahoo-1 well was drilled and then the operator had announced that as a discovery. So this net pay which we have encountered in Wahoo-2 is a natural extension of Wahoo-1 which had 195 net pay which is very positive.

Q: Can you quantify at this early stage, what the financial size of this find could potentially be?

A: There will be few more steps because at this juncture it wouldn't be possible to quantify the size etc. Some more test are required to be done and this test will be in next two months -by about January this will be over and thereafter the Anadarko will make if any announcement after that. At this juncture it's not possible to quantify.

Q: What is BPCL's economic interest in this venture? Do you have any plans of changing that holding in the joint venture?

A: This current interest which is jointly held by BPCL 100% subsidiary Bharat PetroResources (BPRL) and then Videocon in which we hold 25% in this Wahoo composed basin interest along with the Anadarko, Devon Energy and then SK Energy of Korea and BPCL's interest comes to 12.5% ie 50% of 25%.

Q: Any more wells as well which they will be drilling either in the next calendar year or the year after that?

A: BPCL has about 27 exploratory blocks interest across the globe and out of that 10 are in Brazil, one is in Mozambique, Africa and Australia, in Oman etc and nine in India.

Q: I was asking specifically for this joint venture because it's been seen as an extremely lucrative space. So within this JV anymore wells that are likely to be drilled next year?

A: We have plans for another two wells in the same composed basin in 2010-11.

Q: You spoke about 90 feet of high quality net oil pay in Wahoo-2 well. Can you take us through what that means in terms of the prospects of finding good quality crude or gas there and by when do you think the recovery can be done from this project?

A: The significance of 90 feet pay as I said this confirms the original 195 net pay which was established in Wahoo-1 and in the same strata this is falling, this 90 feet net pay also and that is why this is significant and at least this Wahoo well 2 is about 8 km from the original Wahoo well 1 and this extends up to the north 8 km and as I said at this juncture it won't be able to quantify the find but this augurs well for the well 1 discovery also.

Q: A word also on what's going on with shareholding changes in the Bina refinery where we believe Oman oil has hiked its stake. What is the eventual structure or game plan?

A: We have recently signed an agreement with Oman and we have agreed to give them ultimate 26% shareholding in Bina. They have reentered. Earlier they had frozen the equity investment now they will be 26% partners.