ONGC to Take Control of HPCL to Create Big Oil Entity
ONGC (Oil and Natural Gas Corporation) is all set to take control of HPCL (Hindustan Petroleum Corp) as part of the plan of the government to create an integrated public sector oil entity which can be compared with global oil companies like Exxon and Shell BP, according to statements given by top government officials to ET.
One of the officials stated that, this is a big decision and soon a Cabinet note will be moved. He also added that, the government will transfer its majority shareholding to ONGC which will then become the holding company of HPCL.
The officials also told that, the move will not be a complete merger as it may take more time however the purpose will be served with this step.
The exploration functions of ONGC will be merged with refining and distribution capabilities of HPCL. HPCL which presently owns and operated 2 major refineries in Vishakapatnam and Mumbai has the largest lubricant unit of the country and the 2nd largest pipeline network of 3,015km.
The primary idea behind the vertical integration is that, it will reduce risk-high crude oil prices will boost the exploration business and when they drop, the distribution segment will benefit.
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