“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

Improving livelihood with financial access is the task ahead

“Demonetisation has created an entire system of digitisation and financial inclusion,” said PK Gupta, managing director (Retail and Digital Banking), State Bank of India, at the launch of the Governance Now India Financial Inclusion Case Book in Mumbai on Friday. He further stated though there

How Bhutan is enuring food security

When Bhupen Gurung from the Royal University of Bhutan told the audience at the TERI School of Advanced Studies, New Delhi, about dropping levels of poverty in Bhutan, many public policy academicians were left intrigued. Coming from the ‘Land of Happiness’ (Bhutan ranked 97 among 155 countr

Uncivil servants

An IPS officer of Tamil Nadu cadre holding the post of assistant superintendent of police was caught cheating, using high-tech gadgets, while appearing in the IAS examination in October, as was widely reported in the media. The case has shaken the conscience of the enlightened citizenry and shows the rot t

Manufacturing will remain dark horse for economy: Niti Aayog expert

Manufacturing will remain the dark horse for the Indian economy, especially as labour-intensive industries shift from China, writes Sukhgeet Kaur, director, project appraisal and management division, Niti Aayog in an official

The un-importance of being Pravin Togadia

Vishwa Hindu Parishad (VHP) working president Pravin Togadia is in the news after a long time. This week, Togadia went `missing` for an entire day as the Gujarat and Rajasthan police were on the lookout for him, arrest warrant in hand. Togadia was later brought to a hospital in an unconscious state. At a p

Confused signals

Of late, there have been some anxious moments for broadcasters and no one knows where it’s been coming from, and why it’s happening. For starters, the ministry of information and broadcasting is the licensor for TV channels, in two categories: (i) news and current affairs (&lsquo

Current Issue

Current Issue

Video

CM Nitish’s convoy attacked in Buxar

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter