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Oil and Natural Gas Corporation (ONGC) is hopeful of merging its downstream subsidiaries next year. Speaking after ONGC’s 26th Annual General Meeting, Chairman and Managing Director, Shashi Shankar said, “A committee has been formed to look into the synergies.”
He was responding to a query about the synergies after ONGC’s acquisition of fellow public sector undertaking, Hindustan Petroleum Corporation Limited . Elaborating on the way ahead, Shankar said, “We are hopeful of a merger between Mangalore Refinery and Petrochemicals Limited (MRPL) and HPCL next year.”
ONGC completed acquisition HPCL in January 2018 after spending nearly ₹ 36,915 crore. After initially dragging its feet, the HPCL board recognised ONGC as its promoter a few weeks ago. This is being looked as another step towards greater synergy between the two companies and an opportunity for ONGC to organise its downstream businesses.
Responding to queries on the proposals to list ONGC Videsh (OVL), the overseas investment arm of the company on the stock exchanges, Shankar said, “As of now, we have done a significant investment in the form of Mozambique, that is presently at Final Investment Decision (FID) stage. We have responded to the Ministry that the time is not right to list ONGC Videsh... It would be better to list after Mozambique asset is monetised.”
OVL and its Indian as well as foreign partners have agreed to invest $ 20 billion in constructing a gas liquefaction and export terminal in Mozambique to monetise vast offshore natural gas reserves they had found. The consortium has taken a FID for Area-1 Mozambique LNG project in June this year.
On the capital expenditure (capex) plans for the year, an ONGC presentation stated that capex target for financial year 2019-2020 has been set at ₹ 32,921 crore. capex in fiscal 2018-2019 stood at ₹ 29,449 crore and ₹ 28,427 crore in fiscal 2017-2018.
Charting out the longer term vision of the company, Shankar said that ONGC will achieve a domestic gas production of 40 Billion Cubic Meters (up from 24 BCM in fiscal 2018-2019) before 2040. There is also an aim to have 5-10 GW (from 23 MW solar and 153 MW wind) of renewable energy assets by 2040.
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