Govt hints at integrated refinery-cum-petrochemical vertical post ONGC deal

Petroleum minister Dharmendra Pradhan on Monday hinted at the consolidation of all the downstream units of Oil and Natural Gas Corporation (ONGC), post its acquisition of Hindustan Petroleum Corporation (HPCL) which will be an integrated refinery-cum-petrochemical vertical.

This vertical is likely to include HPCL, along with Mangalore Refineries and Petrochemicals (MRPL), ONGC Mangalore Petrochemicals (OMPL), ONGC Petro-additions Ltd (OPaL) under one umbrella. The minister’s statement comes after the ONGC announcement on Saturday that a share purchase deal was signed to buy the government stake in HPCL for Rs 369.15 billion.

“The roadmap of these companies will be decided by the respective boards. Petrochemical has become a big component of both the companies. I think, if they want there can be an integrated refinery and petrochemical vertical – including HPCL, MRPL, OMPL, OPaL and similar projects," Pradhan said addressing a press conference in Delhi. He added that the governance model of HPCL will continue to be the same post the deal by remaining a Central Public Sector Enterprise.

Since, HPCL sales is more than its production of 23.8 million tonne, the addition of 15 MT MRPL refinery will help the company to bridge the shortfall. According to the media reports, HPCL is planning to acquire MRPL in a cash and share- swap deal. The minister added that the completion of the deal within the financial year 2017-18 is a result of "decisive governance."

On Sunday, ONGC chairman and managing director Shashi Shanker too had said that the company will consider merging of the downstream businesses like MRPL with HPCL at a later stage. Similarly, HPCL chairman M K Surana too had shown keenness in public for a downstream integration. However, this is for the first time Pradhan is coming out in public with such an idea – including other projects of ONGC too.

India, China, South Korea to host global energy meet.

Three major consumers of oil and gas -- India, China and South Korea – will co-host the the 16th ministerial round-table conference of the International Energy Forum (IEF) from April 10-12 in New Delhi. Pradhan said that the countries will raise the consumer issues regarding “Asian premium” and crude prices before the 92 participating countries, which include all the producer nations as well. 

For decades, Asian countries were paying a price of up to $6 a barrel more than the US or European refiners to the West Asian producers. Though the issue was raised many times by India in global platforms, it still remains a concern. "The major theme of the conference will be on future of global energy security, transition, technology and investment opportunities," he said. Global energy organisations including the Organisation of the Petroleum Exporting Countries, International Energy Agency will also be represented at the meet.