Govt nod for ONGC petrochem foray

The central government has given a green signal to the petrochemicals plan of Oil and Natural Gas Corporation (ONGC), but has discouraged the largest oil and gas producer from foraying into fuel retailing.

Petroleum Secretary M S Srinivasan said the company has been permitted to set up units to manufacture petrochemicals from residue of its refineries and using natural gas.

"Worldwide, refineries are being converted into refinery-cum-petrochemical complexes to gain from the high margins on petrochemicals. Naturally, ONGC would also be encouraged to set up petrochemical complexes wherever they have refineries or have a natural gas source," he said.

The Rs 4,900 crore aromatic complex and olefin complex that ONGC has planned to set up adjacent to its subsidiary Mangalore Refinery and Petrochemicals (MRPL) and the Dahej petrochemical complex in Gujarat are natural extensions to getting the maximum value out of refinery produce and natural gas respectively, he added.

On fuel retailing, he said selling petrol and diesel was a losing proposition and compensation in the form of oil bonds for selling fuel below the cost of production was only available to public sector oil retailers - IOC, HPCL, BPCL and IBP.

"No such compensation mechanism is available to new players in this business including ONGC," he said adding that the company board will take appropriate decision keeping the economics of the business in view.