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Strategies of Indian Oil

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India is likely to delay share sales in state-run oil firms ONGC and Indian Oil Corp by up to six months as lower crude oil prices have hit their value, denting the chances of raising about $11 billion from such sales this financial year, two government sources said. The Centre is likely to delay share sales in state-run oil firms ONGC and Indian Oil Corporation (IOC) by up to six months as lower crude oil prices has hit their value, denting the chances of raising about $11 billion from such sales this financial year, two government sources said.

“Oil India has appointed McKinsey to help work out its corporate strategy. Its challenge is to get more acreage and increase reserve accretion,” a person aware of the development said, requesting anonymity. “Also, given its presence overseas, a robust risk analysis is required.”
ONGC is hurting because, to help meet the federal fiscal deficit target, the Finance Ministry is making it pay for a high level of subsidies, despite the low oil price. India has missed its target for partial privatizations for the past five years and now wants to break with the usual practice of bunching up sales towards the year-end.

Improved production and buying of overseas assets by state-owned firms such as Oil India and Oil and Natural Gas Corp. Ltd (ONGC) is important for energy security because local resources are scarce, with the country having to import as much as 77% of its energy needs. Prime Minister Narendra Modi wants imports to be cut by half by 2030. ONGC is hurting because, to help meet the federal fiscal deficit target, the finance ministry is making it pay for a high level of subsidies, despite the low oil price.

So far, Finance Minister Arun Jaitley has Cabinet approval to sell shares in ten companies, including a 10 per cent stake in IOC and 5 per cent in ONGC. According to the Energy Statistics report prepared by the ministry of statistics and program implementation, estimated domestic reserves of crude oil and gas are at 762.74mt and 1427.15cm, respectively. India follows the US, China and Russia in energy use, accounting for 4.4% of global energy consumption.