Calcutta, Oct. 28: Oil and Natural Gas Corporation (ONGC) plans to ink a long-term pact with international oil traders Glencore to streamline exports of its value-added products.
ONGC sources said the company already had some business deals with Glencore to export naphtha.
“But all these deals were made on a case-to-case basis with no long-term pact coming into effect. What the company is now looking at is a comprehensive business strategy for the export of value-added products,” they said.
Besides naphtha, other value-added products are LPG and kerosene. Total production of such products stood at 3.73 lakh tonnes last year, marginally up from the output of 3.69 lakh tonnes achieved in 2000-01. Since the company had no major marketing strategy, it could not afford to produce more, as that could lead to a huge stockpiling, they added. These products however give a good return, as the price realisation is much more than that for core products like crude.
The value-added products had contributed over Rs 3,000 crore to the company’s overall turnover of Rs 23,237.80 crore.
“Once a proper marketing strategy is in place, the earnings from this segment will definitely increase,” they said.
Sources have pointed out that the long-term marketing tieup with Glencore will also help ONGC reduce its dependence on Indian Oil Corporation for marketing its products.
“The domestic refiners in the public sector including the IOC have failed to comply with their off-take commitment for the products like naphtha. This has not only put ONGC into a financial setback but also led to a operational problem,” they said.
ONGC is now trying to build up its clientele so as to market its value added products directly.
The company, for instance, is supplying around 35,000 tonnes of naphtha to the country’s biggest petrochemical plant, promoted by Reliance Industries.
Through the direct marketing effort, the company is optimistic about selling more naphtha to other petrochemical plants including Haldia Petrochemicals.
The company has also exported around 50,000 tonnes of naphtha during the first half of the current fiscal year, of which at least 50 per cent of the consignment was despatched through Glencore.
Unconfirmed report suggests that ONGC has sold over 1.60 lakh tonnes of naphtha to HPL during the first half and another 15,000 tonnes will be dispatched shortly.