ONGC puts oil retail plan on backburner

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Kuthalam, Tamil Nadu, May 11: After Reliance, it is time now for the state-owned oil and gas major Oil and Natural Gas Corporation (ONGC) Ltd to take a call on its ambitious foray into oil retail outlets.

The public sector behemoth has decided to put on hold its retail outlets foray on the backburner. The company which has licences for 1,600 retail outlets, including 500 outlets under Mangalore Refineries and Chemicals Ltd (MRPL) has decided not to go ahead except its pilot retail outlet launched sometime ago adjacent to Mangalore Refinery project at Mangalore, said R S Sharma, CMD, ONGC.

Addressing reporters on the sidelines of a press conference at Kumbakonam in Tamil Nadu on Sunday, Sharma said, “Given the current situation on the global crude and oil front, it is not viable for us to go ahead with this. We don’t see the situation will improve in the near future and we will hold our plans forever,” he said. The company has planned to roll out 1,600 retail outlets under brand name of ‘OVAL’, he added.

The government has been compensating only oil marketing companies (OMCs) such as the Indian Oil Corporation, the Hindustan Petroleum Corporation and the Bharat Petroleum Corporation for under recoveries, he said. “I personally do not see (oil) prices to come down. The demand continue to outstrip the supply position in the global markets and the prices will be under tremendous pressure in the year too,” he said.

The crude price has touched $117 a barrel and at this rate the under recoveries from sale of petroleum products could touch a whopping Rs 1.8 lakh crore for FY09, he said. The under recoveries went up from Rs 54,000 crore in 2007 and are expected to be in the region of Rs 76,000 crore for the current fiscal.

Decision on Kakinada refinery in two weeks

ONGC, along with its equity partners such as IL&FS, Kakinada Seaports Limited, APIIC will take a decision on the 15 million tonne Kakinada Refinery project in Andhra Pradesh in the next two weeks, said RS Sharma, CMD, ONGC. “There are some issues among our equity partners on economics, viability and marketing angle of the project. We need to settle those issues first then decide on having partners. We hope we will have a decision on all these issues in the next two week,” he said.