IOC Marks Major Milestone with Rs 148 Crore Mercator Petroleum Acquisition

Indian Oil Corporation (IOC), a state-owned enterprise, has completed the acquisition of Mercator Petroleum Limited (MPL) for about Rs 148 crore through an insolvency proceeding. This acquisition is a strategic move for IOC, marking a significant step in expanding its operations in the oil and gas sector. Here are the detailed aspects of this acquisition:

Acquisition Details

  1. Acquisition Cost: IOC acquired MPL for approximately Rs 148 crore as part of an insolvency proceeding. The acquisition was approved by the National Company Law Tribunal, Mumbai Bench, under the Insolvency and Bankruptcy Code, 2016​​​​​​.

  2. Oil and Gas Block: MPL owns an onshore oil and gas exploration block in Gujarat’s Cambay Basin, known as CB-ONN-2005/9. This block, won in the seventh NELP bid round in 2008, potentially contains 45.5 million barrels of in-place oil reserves. In November 2019, IOC’s Koyali refinery, situated approximately 60 km from the block, signed a contract to purchase oil from this block​​​​.

  3. Resolution Plan Implementation: IOC is set to implement the Resolution Plan and complete the necessary regulatory processes, including obtaining any required approvals for the successful execution of the plan​​​​​​.

Financial Implications

  1. Payments to Creditors: As part of the resolution plan, IOC will pay Rs 135 crore to secured financial creditors, who had admitted claims of Rs 291 crore. However, no payment has been made to unsecured creditors, who had admitted claims of Rs 118 crore. Operational creditors like vendors, workers, and employees, with total admitted claims of Rs 73 crore, will receive Rs 5.40 crore​​​​.

  2. Insolvency Proceeding Costs: IOC will also bear the cost of the insolvency proceeding, amounting to Rs 8.7 crore. The insolvency process was initiated by Halliburton Offshore Services Inc., a Cayman Island-based oil services firm, after Mercator defaulted on a payment of Rs 2.87 crore​​.

Broader Context

  • IOC’s Business Expansion: This acquisition is part of IOC’s broader strategy to expand its footprint in the oil and gas sector. The acquisition gives IOC direct access to potential oil reserves, enhancing its operational capabilities in the energy sector​​​​.

  • Significance for the Indian Public Sector: IOC is the second public sector undertaking (PSU) to acquire a company through an insolvency proceeding, following GAIL, which acquired JBF Petrochemicals earlier​​.

This acquisition marks a significant step for IOC, both in terms of expanding its resource base and in demonstrating its ability to navigate complex insolvency and regulatory processes to achieve strategic business objectives. It also reflects a growing trend of PSUs in India actively seeking expansion through strategic acquisitions.



Send Us A Message