The Hindu Business Line : Govt chalking out plan for joint overseas bidding by oil PSUs

WITH energy security becoming the buzzword, the Petroleum Ministry is formulating a strategy to enable domestic public sector oil companies to join hands to compete for buying equity abroad.

The Ministry was looking at creating a package that would comprise the entire value chain — refining, exploration, and other value addition — so that the domestic firms are able to stand and compete with the oil conglomerates that dominate the sector overseas, a Petroleum Ministry official said.

"The need of the hour is to integrate the organisations and strengthen them across the value chain so that they can bring offer a complete package," the official said. This is an improvement on the recommendations of the Synergy in Energy Committee, the official added.

Officials indicated that this would lead to acquiring assets abroad through equity and exploration and production contracts, long-term liquefied natural gas contracts, downstream partnerships, and trans-national pipelines.

With the Energy Committee reviewing the issues of energy security wherein all the Ministries concerned — power, coal, petroleum and natural gas — are expected to make presentations on how to tackle the requirement, the Petroleum Minister, Mr Mani Shankar Aiyar, has asked his Ministry to work out a mechanism which would make the domestic companies more competitive. In this backdrop the Ministry is examining various options to modernise and prepare the PSUs so that they do not lose out to global oil giants, the official told Business Line.

On whether this would mean looking at hiving off ONGC Videsh Ltd from the parent, ONGC, the official said, there were no such plans. The issue of hiving off OVL into a separate corporate entity had first emerged in 2003. Stating that by spinning off OVL from its parent was not favourable at the current juncture, the official said, today what is essential was to have a strong integrated company, which has financial technical and human resource expertise.

Regarding what kind of policy the Ministry would be looking at for overseas acquisitions, the official said, the subject is being approached with an `open mind'. However, the Ministry was clear that it does not want to get involved in bidding battles.

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