BS reported that state owned Hindustan Petroleum Corporation Limited is likely to acquire a oil and gas block in Africa through its subsidiary Prize Petroleum. The company is in talks with a local player for a discovered asset so that it can have a ready cash flow in one or two years.

HPCL's move is part of the overall attempt by oil marketing companies to venture into more lucrative oil and gas producing business. Acquisition of discovered fields helps in reducing risks with the business to some extent.

A senior HPCL official said that "We have decided to spread our investments into conventional and non conventional segments. We are also looking at partnering with successful operators in oil and gas; coal bed methane and shale gas overseas."

HPCL ventured into the upstream sector without much experience. It created a very high risk portfolio without knowing much about the business. Prize Petroleum was set up in 1998 as a joint venture but did not meet with much success.

The official added that "Though we have 20 blocks in India, we have mostly encountered dry wells in the Kerala Konkan basin, Rajasthan (two blocks), Mumbai High (two blocks) and the Assam block, which is now being relinquished by both Oil India and HPCL."

HPCL has decided to change its exploration and production strategy and look at its peers Indian Oil Corporation and Bharat Petroleum Corporation, who, despite being late entrants in this sector, are performing well.

A senior HPCL official said that "There have been many setbacks for HPCL but now we have decided to go systematically about our E&P business. We have been scanning opportunities either in exploration or discovered or pre drilling stage overseas."

(Sourced from www.business-standard.com)