HPCL ventured into the upstream sector without much experience, creating a very high-risk portfolio. Photo: Reuters
Mumbai: Bad prospects have forced state-run Hindustan Petroleum Corp. Ltd (HPCL) to relinquish 19 of its 21 exploration and production blocks, ending its upstream ambitions. In its 2017-18 annual report, HPCL also said the net worth of its fully owned exploration and production subsidiary Prize Petroleum Co. Ltd has partially eroded.
“The management had considered ₹ 24.41 crore as an impairment loss in value of investment. Accordingly, a provision was accounted during FY2016-17. No further impairment is considered necessary during FY 2017-18,” the company said.
HPCL did not reply to an email sent on 17 August.
Until they were relinquished, HPCL held five blocks in the Krishna-Godavari basin; two each in Mumbai basin, Rajasthan and Kerala Konkan; one each in Cambay basin and Assam, and six in Cauvery basin.
The company’s annual report adds, “Block KK-DWN-2002/3 was relinquished during the year…blocks RJ-ONN-2004/3; MB-OSN-20010/2; RJ-ONN-2004/1, KK-DWN-2002/2, MB-OSN-2004/1, MB-OSN-2004/2; Blocks CY-DWN-2004/1,2,3,4, CY-PR-DWN-2004/1&2, KG-DWN-2004/1,2,3,5 and 6 are under relinquishment.”
“HPCL ventured into the upstream sector without much experience, creating a very high-risk portfolio. Prize Petroleum was set up in 1998 as a joint venture to focus on the company’s upstream ambitions but did not meet with much success,” a person aware of the details said on condition of anonymity.
In 2017-18, Prize Petroleum achieved total production of 33,752 barrels of crude oil from domestic oil field at Hirapur (Gujarat). PPCL has a wholly-owned subsidiary namely Prize Petroleum International Pte Ltd. (PPIPL), incorporated in Singapore. PPIPL has 11.25% and 9.75% participating interests in two hydrocarbon blocks, T/L1 and T/18P respectively in Australia.
ALSO READ | ONGC repays a third of loan taken to buy HPCL
“PPIPL has achieved its share of production of 459,269 BOE (barrels of oil equivalent) from Yolla producing field (T/L1). During 2017-18, PPCL achieved total revenue of ₹106.27 crore on consolidated basis as compared to ₹86.49 crore achieved during previous year,” said HPCL in the annual report.