New Delhi: Asserting that the acquisition of Numaligarh Refinery Ltd (NRL) has brought vertical synergy for Oil India Limited (OIL), OIL said that NRL has earmarked an investment of Rs 90 crore for two oil blocks — Namrup and West Mechaki — where it is partnering with the E&P company as the operator. "NRL has already ventured into upstream oil exploration partnering with OIL as operator in two oil blocks (Namrup and West Mechaki). NRL has earmarked investment of around Rs 90 crore in these two blocks," said OIL in an official statement released on Wednesday.
"OIL and NRL are partners in several other joint ventures in related businesses. The synergy will enable further consolidation of OIL-NRL group in such JVs," said the statement.
On April 13, the OIL CMD had termed NRL's acquisition as a strategic business decision which has enabled vertical integration in the oil and gas value chain. "For OIL, acquisition of majority shares of NRL is not only a strategic business decision but one of the defining moments of OIL's corporate journey as an E&P Company looking for vertical integration in the oil & gas value chain," Mishra had said.
"The acquisition is likely to partially mitigate the effect of volatility of crude price cycle due to diversification of cash flows, reduce earnings volatility and enhance shareholder value. At the same time, NRL also now has become part of an integrated energy company and together OIL-NRL can create a tremendous synergy that will help both the entities to consolidate their business plans and achieve sustainable growth and success in all their endeavours," he had said.
OIL is the primary source of crude oil for NRL. Annually, OIL supplies around 2,000 TMT of crude oil to Numaligarh Refinery, which is 67 percent of NRL's requirement. Further, the amount of crude oil supplied by OIL is around 60 percent of indigenous crude produced by the company in the North East. Both the companies can benefit from optimisation/further improvement of feedstock supply and crude processing at the refinery.
"With the massive refining capacity enhancement project of NRL and aggressive exploration plans of OIL in existing and new hydrocarbon blocks in North East, OIL-NRL will be able to contribute immensely in ensuring energy security of the nation and achieve the targets set by the Ministry of Petroleum and Natural Gas under North East Hydrocarbon Vision 2030. Presence of EIL in the consortium will further boost the technical expertise, which will become more relevant considering the expansion plan of NRL," said the statement.