On a high

New Delhi, Oct. 1: Upstream oil firm ONGC and Hindustan Petroleum Corporation Limited (HPCL) have settled their differences over HPCL’s shareholding in MRPL. Chairman-cum-managing directors of the two companies are keen on exploring synergies following recent agreements between the two companies in the upstream oil sector.

HPCL chairman M.B. Lal, who was here for the agreement to take over Oil and Natural Gas Corporation’s (ONGC) marginal fields in Mumbai High, said, “It is the new spirit developing between the two companies that is important.”

Lal said HPCL was also in the ONGC-led consortia that has bid for 29 oil and gas exploration blocks under the sixth round of the new exploration licensing policy (Nelp VI).

ONGC chairman R.S. Sharma indicated that he and Lal were putting in place another agreement between the two companies in the downstream sector.

Not long ago, ONGC wanted HPCL out of Mangalore Refinery and Petrochemicals Ltd (MRPL) when it proposed to buy out HPCL’s 17 per cent stake in MRPL.

ONGC, over a period of time, has picked up 74 per cent in MRPL, which was initially a joint venture between the Aditya Birla group and HPCL, by buying out the Birlas and undertaking financial recast exercises.

Sharma’s predecessor at ONGC, Subir Raha, wanted HPCL to sell its stake in MRPL and exit the refinery.

HPCL was averse to selling the stake since it considered its stake a strategic investment in MRPL.

ONGC said it had a right to HPCL’s equity-holding as part of a shareholders’ agreement.

The two PSUs quarrelled at the petroleum ministry, but a solution never emerged as both remained intransigent.

However, with the two wishing to live in amity, the indications are that ONGC will drop its stand against HPCL vis-à-vis MRPL.

The spat even spilled over to purchase of petroleum products from MRPL. HPCL claimed first right over the products of the refinery, being a shareholder, but ONGC refused to give any preference over other companies such as Indian Oil and Bharat Petroleum Corporation (BPCL).

The Mumbai High sweet crude was another point of dispute. ONGC preferred to meet the needs of its own subsidiary, MRPL, over the requirements of HPCL and BPCL.

HPCL and BPCL had argued that their refineries in Mumbai were configured to process the crude from Mumbai High and they would lose money if they switched to imported crude.