State-owned Indian Oil Corporation (IOC) has acquired Mercator Petroleum for about Rs 148 crore in an insolvency proceeding, according to regulatory filings by the company.

 “The resolution plan submitted by IOC for acquisition of 100 per cent stake in Mercator Petroleum Limited (MPL) has been approved by the National Company Law Tribunal, Mumbai Bench vide its order dated November 2, 2023 under the relevant provisions of the Insolvency and Bankruptcy Code, 2016,” the firm said in the filing.

 MPL has an onland oil and gas exploration block located in Cambay Basin, Gujarat. The block CB-ONN-2005/9, which the company had won in 7th NELP bid round in 2008, has potential oil discovery of 45.5 million barrels of inplace reserves.

 IOC’s Koyali refinery is located about 60 km from the block and in November 2019 it signed a contract to buy oil from the block.

 “IOC will implement the Resolution Plan and complete the regulatory processes, including obtaining necessary approvals, if any, for successful implementation of the Resolution Plan,” it said.

 As per the resolution plan, the company will pay Rs 135 crore to secured financial creditors, who had admitted claims of Rs 291 crore. No payment has been provided for unsecured financial creditors, who had admitted claims of Rs 118 crore. The resolution plan offers Rs 5.40 crore to operational creditors - vendors, workmen, employees and statutory dues - against their total admitted claims of Rs 73 crore.

 Additionally, IOC will bear insolvency proceeding cost of Rs 8.7 crore. Cayman Island-based oil services company Halliburton Offshore Services Inc had initiated insolvency proceedings in August 2021 after Mercator defaulted on payment of Rs 2.87 crore. 

 IOC’s resolution plan for Mercator Petroleum was approved by the committee of creditors by 100 per cent vote. It then moved to the NCLT, which has now given its approval.

 IOC is the second PSU to have acquired a company in an solvency proceeding. In March this year, India’s largest gas firm GAIL acquired insolvent private-sector chemical company JBF Petrochemicals for Rs 2,079 crore, helping the state-owned firm expand its footprint in the petrochemical business.

 GAIL had outbid a consortium of IOC and Oil and Natural Gas Corporation (ONGC) in the insolvency process run by IDBI Bank to recover Rs 5,628 crore of dues to financial and operational creditors.

 JBF was incorporated in 2008 to set up a 1.25 million tonnes a year capacity purified terephthalic acid plant at Mangalore Special Economic Zone. The plant, which is a backward integration project for JBF Industries’ polyester plants, was commissioned in 2017 but stopped operations after the company defaulted on its loans in the same year.

 Mercator Petroleum Ltd. (MPL) was a wholly-owned subsidiary of Mercator Ltd. MPL is engaged in the business of petroleum exploration, development and production in India and abroad.