Oil and Natural Gas Corporation (ONGC) plans to launch its oil trading business in the next financial year in partnership with an international firm, targeting an annual profit of $1 billion, a company executive said on Monday.
India’s largest oil and gas producer aims to consolidate on one platform the extensive crude oil purchases made by its group refiners — Hindustan Petroleum Corporation Ltd (HPCL) and Mangalore Refinery and Petrochemicals Ltd (MRPL) — along with the crude produced and marketed by its overseas subsidiary, ONGC Videsh Ltd (OVL).
The total crude oil volume available at the group level for the proposed trading desk is estimated at 70–90 million tonnes per year, said Ajay Kumar Singh, Chief of Corporate Planning at ONGC.
To execute this plan, ONGC will form a specialised trading company in joint venture with an international partner. ONGC is evaluating interest from four global firms and expect to finalise a partner in the next few months, Singh said. HPCL and MRPL will also hold stakes in the trading venture, while the ONGC group will retain a majority share and the international partner will be a minority stakeholder, he said.
The company expects the trading business to achieve annual profits of around $1 billion after it stabilises, Singh added.
Separately, ONGC has signed an agreement with BP to engage its subject matter experts for the KG-DWN-98/2 deepwater block, said Pankaj Kumar, Director (Production), ONGC. BP’s experts will assess the field and recommend measures to address its underperformance.
The KG block currently produces about 30,000 barrels per day (bpd) of crude oil and 2.8 million standard cubic metres per day (mmscmd) of gas, against a target of 45,000 bpd and 5 mmscmd, respectively.
ONGC is also contemplating partnerships with international oil companies as technical service providers for additional fields, similar to its engagement with BP at Mumbai High, Kumar said. These discussions are at a preliminary stage, and the company has yet to identify the specific fields.
