Mar. 22 – In an effort to supply the growing domestic demand for oil, state-owned Indian Oil and Oil India have jointly placed a roughly US$600 million takeover bid for U.K.-based Gulfsands Petroleum.

Gulfsands Petroleum, which produces 14,000 to 17,000 barrels of oil per day from their holdings in Syria and the Gulf of Mexico, has rejected the unsolicited takeover offer, but remains receptive to other offers.

“The board is unanimously of the view that the proposal is wholly inadequate and materially undervalues the company,” Gulfsands said in a statement. “The rejection does not mean that the transaction has fallen through. They can raise the offer, which they should, but the two companies are yet to put their heads together on the issue.”

Experts have speculated that the offer was somewhere between 315 to 350 pence a share for the London-listed oil explorer. Reports also say that Gulfsands’ board of directors is not willing to accept any offer less than 400 pence per share. All parties are likely to pursue further talks as the Indian oil companies weigh their next step.

If the deal eventually works out, it would become the second takeover of a U.K.-based company by an Indian state-owned company in as many years. Imperial Energy was acquired by India’s Oil and Natural Gas Corporation in 2009.

The Indian government allowed Indian Oil and Oil India to jointly bid for oil acquisitions in December 2005 and since then, the two have been exploring overseas oil acquisitions in Africa, Southeast Asia, South America, the Middle East and Russia.

“We are looking at various opportunities around the world,” Oil India Chairman N. M. Borah told Business Week on March 20. “We are in various stages of negotiations, and we hope something works out.”

India’s oil secretary, S. Sundareshan, said on March 18 that the Indian government has asked both their state-owned oil companies, Oil India and Oil and Natural Gas Corporation, to make at least one large acquisition a year starting in April.