China National Petroleum Corporation (CNPC) — a leading global integrated energy player — is poised to enter the oil rigs business in India. The Chinese company, through its wholly-owned subsidiary Baoji Oilfield Machinery (Bomco), will partner Mumbai-based Gremach Infrastructure — a leading infrastructure developer in the oil rig business.
Here’s how the CNPC-Gremach partnership will be structured. To start with, Gremach Infrastructure will float a wholly-owned subsidiary, Gremach Energy. And CNPC subsidiary, Bomco, in turn, will acquire a strategic minority stake in Gremach Energy. Confirming this, Gremach Infrastructure MD Rishi Raj Agarwal told ET: “We are floating a subsidiary, Gremach Energy, to directly enter the oil rigs business. Bomco, which will be the supplier of the oil rigs, will acquire a 5-10% strategic stake in Gremach Energy.”
Incidentally, Bomco was the developer of the first oil drill rig in China. Within the CNPC fold, Bomco is the largest machinery maker that can churn out a diverse range of oilfield drilling/production equipment, including complete sets of rigs.
However, how much China’s Bomco will fork out for a minority stake in the yet-to-be-formed Gremach Energy is still under wraps. Gremach officials are tight-lipped about Gremach Infrastructure’s enterprise valuation.
Industry experts feel Gremach’s decision to enter the oil rigs business is well-timed. Globally, since oil prices have risen and the world’s main hydrocarbon provinces have been tapped, oil groups have come under increasing pressure to secure new reserves, raising their need for offshore rigs. Such strong demand has led to a sharp spurt in the cost of rigs. Over the past 12 months, rents for deepwater rigs have grown 13% to an average of nearly $500,000 a day.
Gremach proposes to raise Rs 1,000 crore to fund this new line of business. A portion of this will be raised through a $75-million FCCB (fully currency convertible bonds) issue. “We initially plan to invest $100 million in the oil rigs business,” Mr Agarwal said.
The company is also setting up two SEZs in Maharashtra at a total investment of around Rs 250 crore.
Gremach has also submitted a proposal to the West Bengal government to set up a port on the Digha coast, which is close to Orissa. It also plans to set up a 250-acre metal SEZ and another 250-acre multi-service SEZ there. A 100-acre free-trade zone is also planned.
“We require 1,500 acres at Digha. The port will be spread over 900 acres,” said Mr Agarwal. Mott MacDonald has carried out a feasibility study of the port. Mr Agarwal said the land at Digha is non-agricultural in nature. “We are open to the idea of buyout of the entire chunk of land,” he said.
Here’s how the CNPC-Gremach partnership will be structured. To start with, Gremach Infrastructure will float a wholly-owned subsidiary, Gremach Energy. And CNPC subsidiary, Bomco, in turn, will acquire a strategic minority stake in Gremach Energy. Confirming this, Gremach Infrastructure MD Rishi Raj Agarwal told ET: “We are floating a subsidiary, Gremach Energy, to directly enter the oil rigs business. Bomco, which will be the supplier of the oil rigs, will acquire a 5-10% strategic stake in Gremach Energy.”
Incidentally, Bomco was the developer of the first oil drill rig in China. Within the CNPC fold, Bomco is the largest machinery maker that can churn out a diverse range of oilfield drilling/production equipment, including complete sets of rigs.
However, how much China’s Bomco will fork out for a minority stake in the yet-to-be-formed Gremach Energy is still under wraps. Gremach officials are tight-lipped about Gremach Infrastructure’s enterprise valuation.
Industry experts feel Gremach’s decision to enter the oil rigs business is well-timed. Globally, since oil prices have risen and the world’s main hydrocarbon provinces have been tapped, oil groups have come under increasing pressure to secure new reserves, raising their need for offshore rigs. Such strong demand has led to a sharp spurt in the cost of rigs. Over the past 12 months, rents for deepwater rigs have grown 13% to an average of nearly $500,000 a day.
Gremach proposes to raise Rs 1,000 crore to fund this new line of business. A portion of this will be raised through a $75-million FCCB (fully currency convertible bonds) issue. “We initially plan to invest $100 million in the oil rigs business,” Mr Agarwal said.
The company is also setting up two SEZs in Maharashtra at a total investment of around Rs 250 crore.
Gremach has also submitted a proposal to the West Bengal government to set up a port on the Digha coast, which is close to Orissa. It also plans to set up a 250-acre metal SEZ and another 250-acre multi-service SEZ there. A 100-acre free-trade zone is also planned.
“We require 1,500 acres at Digha. The port will be spread over 900 acres,” said Mr Agarwal. Mott MacDonald has carried out a feasibility study of the port. Mr Agarwal said the land at Digha is non-agricultural in nature. “We are open to the idea of buyout of the entire chunk of land,” he said.
Via: India Economic Times
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