Indian Oil Corp. is awaiting government approval to pursue a joint venture to bid for offshore oil and gas blocks with Petronas. The proposal is at an initial stage and needs approval from Indian Oil's board of directors and majority shareholder, India's Ministry of Petroleum and Natural Gas which holds an 80% stake in the firm, a company official said. A decision is expected to be made at the next board meeting scheduled for Tuesday. The company - No. 209 on Fortune magazine's Global 500 list of the world's largest companies - is keen to expand its portfolio to include an upstream business after the country's oil sector was fully deregulated, exposing oil companies to volatile global crude oil prices. Officials couldn't say how much the company would invest in oil and gas exploration although some industry sources claim Indian Oil has earmarked nearly US$1 billion in the next few years.
Proceeds from a proposed public equity issue may be used to fund upstream investment. The company has said it is likely to pursue an overseas float to raise more than 15 billion rupees through an issue of around 7.7 million shares. The proceeds from Indian Oil's equity issue would be used to service company debt, estimated at INR190 billion, and to fund further growth, Indian Oil's Director (Finance) P. Sugavanam said last week.