Anil Agarwal, the billionaire owner of resource giant Vedanta Ltd, has just rescued the Narendra Modi government from the largest privatization exercise ever conducted in independent India which resulted in failure by submitting an initial bid for the strategic divestment of the company from oil refining and trading, Bharat. Petroleum Corporation Ltd (BPCL).
Only Vedanta has come forward to disclose that it has submitted an expression of interest for BPCL, while the government has been silent on the number and names of bidders, except to say that it has received “multiple expressions of interest” when the term ends. . closed on mondays.
While global oil and gas giants, including local Reliance industries, have shied away from deals, in part due to the current oil market scenario and the uncertain future of oil in the face of global climate change targets and the Concomitant push toward renewables, Agarwal appears to be making a different bet on the oil game.
Remember, it’s the same Agarwal that bought Bharat Aluminum Co Ltd (BALCO) and Hindustan Zinc Ltd under the privatization program of the former NDA government, led by AB Vajpayee at the turn of the century.
Cairn Oil & Gas, which Vedanta acquired in 2011 from Britain’s Cairn Energy, is India’s largest private sector crude oil producer, currently producing from assets in Rajasthan, Andhra Pradesh and Gujarat. The Mangala, Bhagyam and Aishwariya fields, the top three discoveries in the Rajasthan block, accumulate hydrocarbon reserves of approximately 2.2 billion barrels of oil equivalent.
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Cairn vision
Cairn contributed around 24 percent to India’s domestic crude oil production in the 2019-20 financial year and has a vision of producing 50 percent of India’s oil and gas, according to its website.
Cairn has an interest in 58 oil blocks in India, including the 41 blocks under auction in Round I of the Acreage Open Licensing Policy (OALP), 5 blocks each in Round II and Round III, and two awarded in the Small Fields Discovery Round (DSF). II in Andhra Pradesh, Assam, Tamil Nadu, Tripura, Rajasthan, Maharashtra and Gujarat. With the addition of these new blocks, Cairn’s portfolio now totals some 65,000 square kilometers, paving the way for the next wave of hydrocarbon exploration in the country, he said.
If it succeeds in acquiring BPCL, it would be an advanced integration for Vedanta, helping it to use some of the locally produced oil for its own refinery, as well as to sell it domestically.
BPCL’s stature as India’s third largest oil refinery and second largest fuel retailer would be a good fit for Vedanta.
On the other hand, Mukesh Ambani has cited concerns about climate change to transform his energy business into a new energy company by 2035, offering enough indications about his position on oil.
Ambani, according to oil industry sources, may be reluctant to expand refining capacity in addition to the 74 million ton (mt) refining and petrochemical complex that his company already operates in Jamnagar in Gujarat.
Industry sources also attribute Reliance’s absence from the BPCL privatization process to its potential interest only in the marketing network of the oil company ‘maharatna’, a scenario that is unlikely to happen, given that the government is selling the company as a whole. Reliance Industries operates retail fuel stations through a joint venture with British oil and gas giant BP.
