Open to merger of oil PSUs

Oil and Natural Gas Corporation (ONGC) said it was in favour of any government move to restructure the oil and gas sector through merger of state-run companies.

Subir Raha, chairman and managing director, said vertical integration was a must for survival of oil and gas majors of India and the government's proposal to merge PSUs was a move in that direction.

"Sectoral companies, as exist in India today, does not conform to the established global paradigm of this industry. Every major oil and gas companies in the world are vertically integrated," he said.

The government has initiated a dialogue to merge Hindustan Petroleum and Bharat Petroleum into ONGC, and merger of Oil India Ltd to Indian Oil Corporation to create two behemoths.

Raha said all ONGC, IOC, HPCL, BPCL, GAIL and Reliance were trying to diversify and integrate in upstream and downstream sectors. "This proves the point beyond doubt that integration is a must. It is not a choice but compulsion," he added.

Raha question the feasibility of all sectoral companies trying to venture into each others area. "If the owner is same (Union government), as it is the case in India, this will lead to duplication of cost, time and energy. This cannot be justified. The question is how to avoid that," he noted.

If the mega merger goes through, ONGC will be a biggest beneficiary as it would have access to huge marketing network of HPCL and BPCL. It will also have huge refining capacity.