Oil & Natural Gas Corporation (ONGC), which supplies crude to oil refiners at a lower price as part of a government subsidy plan, said its board has approved a plan to enter nuclear power and will soon start discussions with the Nuclear Power Corporation of India (NPCIL) for partnering their projects.
For nuclear power, we have the boards approval for negotiating with NPCIL, ONGC CMD Sudhir Vasudeva said. That discussion is about to start.
He said ONGC would bring in its mechanical acumen to the partnership. We have no hesitation to say that we lack expertise in nuclear power. But other things like engineering, mechanical and maintenance are our forte, and we can chip in there.
ONGC has also tied up with the Uranium Corporation of India to extricate uranium from sea water.
ONGC had made a profit of R6,078 crore for the quarter ended June 2012, but that would have been much higher had it not taken a R7,149-crore hit by subsidising public sector oil marketing firms such as Bharat Petroleum, Indian Oil and Hindustan Petroleum.
ONGC said subsidies have hurt its plans to aggressively bid for oil and gas projects overseas. In seven years, since the subsidy scheme, we have paid more than R1.66 lakh crore. Our profit after tax has been impacted to the tune of R88,000 crore, Vasudeva said.
HPCL, which saw its losses triple to R9.249 crore for the first quarter after under-recoveries or losses from selling key petroleum products below their cost rose to R7,321 crore, is planning a major diversification into petrochemicals.
All new refineries that we plan will have the provision to make petrochemicals too, by converting the molecules, said K Murali, director (refineries), HPCL.
Diversification will help provide us a cushion against losses on subsidised petroleum products. HPCL has already diversified into ethanol making, and has two wind power projects at Dhule in Maharashtra and at Jaisalmer in Rajasthan. We will also look at solar power, Murali said.
Meanwhile, BPCL, that had widened its first quarter losses to R8,836 crore on under-recoveries recently tied up with Koreas LG Chem for setting up a R4,000 crore petrochemical complex in Kochi. It has already a firm presence in the upstream segment through Bharat Petro Resources.
Gas reserves from the companys fields in Mozambique, where it is an investor along with Videcon Industries, may be in the region of 100 trillon cubic feet, operator Anadarko said recently.
Gas from the oilfield will flow by 2017-18, BPCL CMD RK Singh told FE in an earlier interview.
Globally, all leading oil companies have diversified across the energy value chain to mitigate the impact from the volatile prices, said K Ravichandran, senior vice-president, at rating firm Icra.
The strategy is to lower their dependence on controlled products.
In September, the government raised diesel prices by R5 a litre, and capped the supply of cooking gas to six cylinders per household a year, providing a respite to oil marketing firms.
Raising diesel prices is expected to reduce under-recoveries by Rs 29,700 crore, while capping of LPG cylinders will lower re-recoveries to R10,800 crore. Before the policy move, total under-recoveries for FY 2012-13 was pegged at R1.88 lakh crore.