New Delhi: The advisory committee on restructuring
of oil PSUs has ruled out merger of the oil entities.
The committee was constituted six months back to consider
consolidation in the oil sector, to consider the options
of a merged entity or entities, with enhanced financial
In the last six months, the ''Synergy in Energy committee''
members deliberated in detail on various merger options.
The committee has noted in its report that mergers and
consolidations world-wide occurred during times of low
oil prices and between companies that were already vertically
they became a means for eliminating excess workforce and
duplicate facilities. In the Indian context, despite some
efforts at vertical integration, the oil PSUs retain their
distinct areas of competence. The committee has also ruled
out a merger on the grounds that it is likely to lead
to loss of jobs.
committee has laid greater focus on domestic exploration
through new technologies as also on pursuing overseas
oil and gas acquisitions aggressively.
has accordingly set stiffer targets for meeting at least
15 per cent of crude oil imports of 80-million tonne per
annum through the oil equity route. It has, therefore,
recommended creation of multiple entities. Towards this
end, it has suggested setting up Oil India Videsh Limited
(OIVL) as an independent subsidiary of Oil India Limited
Videsh Limited (OVL) will pursue larger acquisitions of
over 2-million tonnes of oil and gas equivalent. In the
last fiscal, OVL has already achieved 5-million tonnes
of oil and gas equivalent and by the end of 2007, it expects
to achieve a target of around 9.5-million tonnes per annum
of equity oil and gas abroad.
the targets set up the committee by OVL is not a difficult
task. More than 3mtpa of equity oil is already coming
from Sudan and around one-million tonnes equivalent of
gas from Vietnam.
2.5mtpa will come from Sakhalin as OVL''s share by 2006
end and an additional 2.5tpa is what OVL can buy from
Rosneft at the market price. OVL''s 5A property in Sudan
will start producing by 2007 and the likely share of oil
equity will be around 0.5-1.5mtps by 2006-07, senior officials
from oil PSUs said.
committee has also suggested unbundling the supply and
services of GAIL India Limited. "Unbundling of a
gas monopoly in specific terms is required to facilitate
competition and to reduce conflict among entities,"