“ONGC should merge with other state-run refiners”

ONGC director says that integration will stabilise company's revenue and will help the company in responding effectively to competition from renewable energy and car innovators

GN Bureau | July 22, 2016


#Tapas Kumar Sengupta   #Hindustan Petroleum   #Bharat Petroleum   #Indian Oil   #ONGC merger   #ONGC  
Tapas Kumar Sengupta, director (offshore), ONGC
Tapas Kumar Sengupta, director (offshore), ONGC

Oil and Natural Gas Corporation (ONGC), India's largest oil and gas exploration and production company, should merge with a refining corporation such as Indian Oil, Bharat Petroleum or Hindustan Petroleum to weather price volatility, stabilise its income and stay competitive, a director at the state-run company has suggested. 

 
Tapas Kumar Sengupta, director (offshore), ONGC, told the Economic Times: “As an integrated company, during price fluctuations, ONGC can make up in its refining and petrochemicals business whatever it loses as a crude oil producer. This will help stabilise the company's revenue and profit.” 
 
He further said that major oil firms across the world are better able to deal with the cyclicality of the oil markets because they are integrated.
 
Though ONGC already has presence in refining and petrochemicals through its units, Mangalore Refinery and Petrochemicals and ONGC Petro additions, Sengupta said that the scale has to be much bigger. 
 
Oil prices have tumbled to $46 a barrel from $114 in June 2014. In the past two years, profits have crumbled for oil and gas producers globally, while downstream companies mostly gained as input became cheaper, working capital needs shrunk and not much fresh refining capacity was added. 
 
In 2015-16, the profit of state oil producers – ONGC and Oil India Ltd – fell 10 percent and 7 percent respectively, while the combined profit of three state refiners and fuel retailers – Indian Oil, Hindustan Petroleum and Bharat Petroleum – climbed two thirds. He said an integrated ONGC will also be more tax-efficient, as it will help the company in responding more effectively to competition from renewable energy and car innovators such as Tesla that threaten to take over a large chunk of the global transportation business in future.
 
ONGC too has a small presence in wind power business but it can do more in alternative energy, he said. In order to keep local output of oil strong, ONGC and the country will have to continue to be laser focused on finding new fields and enhancing production amid declining output from the currently producing but ageing fields, he said. 
 

Comments

 

Other News

Business houses donated Rs 956.77 crore to political parties in 4 years

Business houses loosened their purse strings while making donations to political parties, showed an analysis carried out by Association for Democratic Reforms (ADR).   Various sectors of business houses, between FY 2012-13 and 2015-16, donated a total of Rs 956.77 crore, cons

PPP model in metro rail may not be a good idea

The PPP model has been made mandatory in metro rail projects, but it has not been successful in at least three cities – Delhi, Mumbai and Hyderabad.  The cabinet chaired by prime minister Narendra Modi approved a new Metro Rail Policy that m

India must have a cyber security framework: Deloitte

In absence of proper regulatory and supervisory capabilities, some regulators in Asia-Pacific region believe the next financial crisis might be triggered by a cyber attack, said a new report on cyber security. According to Deloitte`s ‘cyber regulation in Asia Pacific’ report, cyber at

Industrial performance has weakened: RBI panel

There is a need for speedier clearance of projects by states, RBI’s monetary policy committee said and added that there is an urgent need to reinvigorate private investment, remove infrastructure bottlenecks and provide a major thrust to the Pradhan Mantri Awas Yojana for housing needs of all.

“Parents need to be taught that each child is special”

It has been a year since you took charge of the new ministry. What is your biggest worry as in charge of education in India? My first priority – and that reflects my worry as well – is to improve the quality of government schools. It’s a tough job. Unfortunately,

Should National List of Essential Medicines be expanded?

Should National List of Essential Medicines be expanded?



Video

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter