The Hindu Business Line : ONGC, Mittal group make efforts to revive joint venture

According to sources, the top brass of both ONGC and Mittal group are expected to meet shortly to decide the future business strategies of their joint ventures namely ONGC Mittal Energy Ltd (OMEL) - the upstream oil and gas JV - and OMESL.

Discussions on OMESL are expected to hover around the possibility of ONGC and its group company MRPL extending privileges like `bid-matching' facility to OMESL. Also to be discussed is the possibility of expanding the product offerings of OMESL beyond international trading.

The bid-matching facility, if extended, will act as an alternative to OMESL's plea for preferential treatment from ONGC for international trading of crude and product.

At present OMESL follows the normal tendering process for import or export of crude oil or refined products for ONGC and MRPL. According to sources in the Mittal group, the uncertainty of tendering process does not allow OMESL to ensure higher returns in a highly competitive international trading circle.

OMESL had earlier sought preferential allocation for international trading of crude and product from the ONGC group.

When contacted, ONGC Chairman Mr R. S. Sharma confirmed that discussions were underway to strengthen ties with Mittal group. "There is no plan to wind up OMESL. There are a few proposals regarding OMESL. We will discuss these with Mr Mittal this month," he said.

ONGC sources, however, insist that they are expecting a firm commitment from Mittal group on developing a more attractive business model for OMESL. "OMESL cannot ride piggy back on ONGC. Ideally, OMESL should be a vehicle for gainful trading of OMEL's share of crude. Also they should engage in third party trading," an ONGC official told Business Line.

"OMESL should develop an independent business model. Also, they should offer more services than simple trading which is highly cartelised and ONGC does not find enough business prospects in the same," he added.

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Ventures with Mittal on, says ONGC

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