• OUTLOOK ARENA
  • VIEWS ON NEWS
  • JUNE 2, 2000

Energy Sources Government proaction

There has been a lot of uncertainty regarding deregulation in the oil & gas sector and the subsequent change in the industry structure. The Government is now talking of pushing the reforms even before the earlier deadline of April 2002.

The Government has now given some indication of the future industry scenario so as to enable the Indian players to withstand competition in the free market environment. There seem to be some concrete plans regarding consolidation in the sector.

The current industry structure:

Type of Companies

Exploration
Production
Stand-alone
Refineries
Refining
Marketing
Stand-alone
Marketing
Oil and Natural
Gas Corporation
Madras Refineries Bharat Petroleum
(BPCL)
Indo Burmah Petroleum
Oil India Ltd. Cochin Refineries Hindustan Petroleum
(HPCL)
 
  Numaligarh Refineries Indian Oil Corporation
(IOC)
 
 
  Bongaigaon Refinery    
  Reliance Petroleum    
  MRPL    

The Government has plans to merge the stand-alone refineries with the existing refining and marketing companies. As per the current scheme of things BPCL will acquire Cochin and Numaligarh Refineries while Madras Refineries and Bongaigaon Refinery & Petrochemicals will be merged with IOC. RPL already has a tie up with IOC for marketing its production and has indicated plans to acquire the stand-alone marketing company IBP.

Stand-alone refining and marketing companies will not be able to survive in the new consolidated environment and it is best that these companies are absorbed by R&M companies. There is only uncertainty regarding MRPL and IBP, though it felt that MRPL will induct a foreign strategic partner as it plans to set up an independent marketing channel. One solution could be to merge MRPL with IBP as it would create strategic advantages for both and result in a more competitive environment.

Restructuring of the industry is definitely on the cards and once the consolidation is over one can hope that the market starts to view this industry favourably.

Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

Equitymaster Agora Research Private Limited (Research Analyst)
103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407