A project-specific special purpose vehicle of Indian Oil Corporation and Oil India Ltd, floated for overseas acquisitions and exploration, is scouting for new oil and gas blocks in Indonesia.
The petroleum ministry officials are currently in talks with the mines and energy department of Indonesia to obtain the exploration and production rights.
Sources close to the development said the chances for Indian oil majors to acquire the blocks are high, supported by Indonesia's low exploration cost that attracted the Indian combine.
Indonesia, the sole south-east Asian member of Organisation of the Petroleum Exporting Countries, is looking to increase its crude output in a bid to reverse its currently-held net oil importer status. As the government is keen on stepping up oil production, it is looking to restart exploration in abandoned brownfields.
The Indian combine is likely to participate in some of the bids in the coming months, said the sources. Indonesian state-owned Pertamina will open tenders in February for exploration of 10 oil and gas blocks, as well as 40 oil and gas brownfields.
So far, international investors have expressed interest in exploring the Suci and Nona oil and gas blocks in east Java. Pertamina is on the way to sign an agreement with Malaysia's Petronas and Petro Vietnam to explore the Randugunting oil and gas block in east Java.
"Tight refining capacity throughout the world amid robust demand growth is expected to leave the price of the benchmark West Texas Intermediate crude hovering between $50 and $60 a barrel in 2006. The Indonesian crude price, on the other hand, is likely to move in the $47-$57 a barrel range next year, which is comparatively economical for the Indian combine," industry sources said.
The IOC-OIL combine is close to acquiring 90 per cent stake in an exploration block at Gabon in West Africa for a total cost of $1.2 billion.
On whether the oil majors have come close to acquiring any of the assets identified in Africa, a senior official of IndianOil said negotiations are on and are in the preliminary stage. The Indian oil SPV won two blocks in Libya recently and is expecting production from these in five years.