| Raha: Lone ranger
New Delhi, Jan. 8: The Oil and Natural Gas Corporation (ONGC) has enough resources of its own to fund its retail marketing foray and does not need the support of Indian Oil Corporation for the purpose, company chairman Subir Raha said here today.
Raha debunked the proposal floated by the department of disinvestment (DoD) to merge ONGC with Indian Oil, forming an integrated company. The DoD move was seen as a thinly-veiled attempt to nix ONGC’s plans to bid for Hindustan Petroleum Corporation Ltd (HPCL) which will shortly be put on the block.
Raha said with a net worth of Rs 29,400 crore, ONGC was the richest company in the country and could make new acquisitions on its own. ONGC is also a near-zero-debt company and has a sovereign credit rating. This would give it a distinct advantage in raising fresh resources as well, he added.
The ONGC chief said the corporation was ready to bid for HPCL but would have to await government approval.
The DoD is reported to be of the view that ONGC should not be allowed to bid for HPCL as it should concentrate its resources on oil exploration and production. The trend worldwide is to form integrated oil companies that span both the upstream oil exploration and downstream refining and marketing segments. This enables profits from marketing to cover the high risks involved in oil exploration.
The ONGC chairman said he was optimistic about receiving the government’s approval to bid for HPCL as Iffco and Kribhco had also been allowed to bid for public sector fertiliser companies.
Speaking informally to journalists at the Petrotech-2003 International Conference and Exhibition that began here today, Raha added that ONGC has drawn up a Rs 400-500 crore plan to kick-start three new fields. These are expected to start yielding I.5 to 3 million tonnes of oil a year after two-and-a-half years.
Raha said the three oilfields were G-1 in the eastern offshore KG basin and Vasai east and D-1 in the western offshore area of the country. While Vasai east was discovered last year, D-1 was an earlier find.
Raha said the downstream public sector oil companies had agreed in principle to pay the price of South African ‘bonny light’ for ONGC crude supplied during the current fiscal. These companies have until now paid a provisional price of $ 22 per barrel pending the final agreement.
There is a difference of $ 6 per barrel between the refinery gate price of imported crude and that supplied by ONGC. Raha said this advantage would be shared between ONGC and the downstream companies—IOC, HPCL and BPCL.
In an attempt to woo foreign investment, Union petroleum minister Ram Naik today told delegates at the Petrotech-2003 conference that the country would invest Rs 1.7 lakh crore in the hydrocarbon sector during the current Five-Year Plan.
Inaugurating the four-day conference, he said the recent oil and gas finds by Cairn Energy and the Reliance-Niko consortium had changed the entire hydrocarbon scenario of the country.
The minister said he was confident that more companies would come forward to invest in oil blocks that would be offered for exploration during the fourth round in April this year.