HPCL arm Prize Petroleum takes a ₹ 24.41 crore hit

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.

“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.

Hindustan Petroleum Corporation Ltd.(HPCL)