Total Targeted for Hindustan Venture
Posted on: Thursday, 30 March 2006, 12:00 CST
By Richard Orange, The Business, London
Mar. 26--French oil major Total may step in as a bidder for the $3bn (E2.5bn, £1.7bn) refining and petrol station joint venture with Hindustan Petroleum after BP's decision to pull out of the deal.
Hindustan's top management will meet this week to discuss whether to approach one of BP's rivals for exclusive talks, or whether to run an auction for the stake. It will then instruct HSBC, which is advising it on the venture, to begin talks.
As reported in The Business earlier this month, Total, along with several Middle Eastern companies, had already been lobbying the Indian company to allow it to muscle in on its British rival's deal.
Hindustan had been in exclusive negotiations with BP since signing a letter of intent during a visit by BP chief executive Lord Browne in October.
The Business understands BP decided to pull out because of worries about the wisdom of increasing exposure to India's petrol retail and refining markets. A source said: "Obviously Hindustan is disappointed because they've spent some seven months on this. We think it's something BP decided in their board meeting. I don't think it was anything to do with the economics of the project. It was more a decision about investment in the downstream in general."
The petrol retail business has been lossmaking in India this year because of government-imposed price caps.
The 50:50 joint venture aimed to build a $3bn refinery in Bhatinda in northern India and set up a chain of co-branded retail outlets to sell the 180,000 barrel per day output.
The source said Hindustan had not significantly altered the terms of the deal it was offering, as had been reported in the Indian press.
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500104, BP, HBC, HSBA,
Source: Sunday Business
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