India’s Oil & Natural Gas Corp. has agreed to purchase the government of India’s majority interest in Hindustan Petroleum Corp. Ltd., which operates refineries in Mumbai and Visakhapatnam and a joint-venture refinery in Bathinda.
The Indian government entered an agreement with ONGC on Jan. 20 for sale of its 51.11% equity shareholding in HPCL for a consideration of 369.15 billion rupees, India’s Minister of Petroleum and Natural Gas Shri Dharmendra Pradhan said.
In line with India’s 2017-18 budget announcement to create Indian oil majors and scheduled to be completed before the end of January, the ONGC-HPCL integration will be the country’s first vertical integration in the petroleum industry to help leverage the strength of both the companies across the entire value chain, including the upstream, midstream, and downstream sectors, according to Pradhan and ONGC.
While the new group company will have the advantage of having enhanced capacity to bear higher risk, take higher investment decisions, and avail economies of scale, HPCL will remain a board-managed central sector public enterprise as well as maintain its distinct identity and brand value, Pradhan said.
The announcement follows an early 2017 Indian federal budget presentation suggesting value-chain integration through the merger of some or all of the country’s state-owned oil and gas companies, (OGJ Online, July 18, 2017).
In September 2017, however, A.K. Srinivasan, ONGC’s director-finance, made clear that following the ONGC-HPCL integration, HPCL would remain a standalone company (OGJ Online, Sept. 5, 2017).
Alongside a series of planned expansions at its existing refineries, HPCL also recently broke ground on a joint-venture project with the state government of Rajasthan to set up a 9 million-tonne/year integrated refinery and petrochemical complex at Pachpadra Tehsil, Barmer District, Rajasthan (OGJ Online, Jan. 10, 2018).
Contact Robert Brelsford at [email protected].