BLBG:Oil India Said to Study Possible Purchase of Cove Energy
Oil India Ltd. (OINL), India’s second- biggest state-owned energy explorer, is considering a possible purchase of Cove Energy Plc (COV), which has assets in east Africa, said two people with knowledge of the matter.
Oil India is studying documents related to the U.K. company that put itself up for sale last week, the people said, asking not to be identified because they’re not authorized to discuss the process. Bids for London-based Cove may exceed $1.2 billion, one of the people said. Cove has a market value of 609 million pounds ($933 million).
Indian companies are looking across the world for oil and gas deposits to secure supplies as demand grows at home. Cove, in which BlackRock Inc. has a stake, is part-owner of a field in Mozambique that may hold enough gas to be converted into liquid form and shipped to countries including India, Asia’s second- fastest growing major economy.
“Indian companies would be very interested in Cove because of the large gas reserves in Mozambique,” said Rina Sanghavi, a Kolkata-based research analyst at SPA Securities Ltd. “India needs gas to meet shortages and Mozambique is near enough to bring the gas to India.”
Oil India Chairman N.M. Borah didn’t answer two calls made to his mobile phone seeking comment on the possible deal.
The Indian explorer rose as much as 0.6 percent to 1,110 rupees and traded at 1,106.65 rupees in Mumbai trading as of 10:22 a.m. The benchmark Sensitive Index (SENSEX) fell 0.7 percent. The stock dropped 16 percent last year.
Chinese Competition
Cove, which climbed 20 percent in 2011, jumped another 11 percent on Jan. 5, when it put itself up for sale. The shares closed at a record 128.5 pence on Jan. 10 before falling 3.5 percent to 124 pence in London yesterday. BlackRock, the world’s largest asset manager, has a 7.6 percent stake in Cove, according to data compiled by Bloomberg.
Oil India may face competition from Chinese buyers, one of the people said, without naming the companies. The Indian company has 135 billion rupees ($2.6 billion) in cash and is seeking to use part of the reserves to acquire oil and gas deposits outside the country, Finance Director T.K. Ananth Kumar said Nov. 14.
Cove holds an 8.5 percent stake in the Rovuma Area 1 off Mozambique, which is operated by Anadarko Petroleum Corp., and has India’s Bharat Petroleum Corp. (BPCL) and Videocon Industries Ltd. as partners, according to the company’s website. The partners have found 15 trillion to 30 trillion cubic feet of recoverable gas, enough to support the setting up of a liquefied natural gas production facility.
The U.K. explorer opened its data room last month to interested bidders in its Mozambique project. Cove is also working with Total SA of France and BG Group Plc (BG/) to search for oil and gas off Kenya and with Etablissements Maurel & Prom SA in Tanzania.
Oil India has held talks with Gabon’s national oil company for a partnership to buy Maurel’s assets in the African nation, two people with direct knowledge of the matter said Oct. 25.
To contact the reporters on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net; George Smith Alexander in Mumbai at galexander11@bloomberg.net
To contact the editors responsible for this story: Amit Prakash at aprakash1@bloomberg.net; Philip Lagerkranser at lagerkranser@bloomberg.net
