India: Oil Industry Mega—Merger? Mega Oil Merger Ahead: India to Fuse State Companies into Oil–Behemoth

Editor: Dominik Stephan

The Indian government examines plans to merge its 13 state oil firms into a single petro-giant, dwarfing even established big oil firms like Chevron or Rossneft.

Related Vendors

(Picture: Daniel Sinoca (CC0))

New Delhi/India – With companies like the Oil and Natural Gas Corporation (ONGC), refiner and fuel retainer Indian Oil, Bharat Petroleum, BSE, Hindutan Petroleum GAIL, Chennai Petroleum, Oil India, and the refinery operators in Mangalore and Numaligarh, the mega-merger could create an oil-behemoth able to compete on par with firms like BP or Rossnefts (with a market capacity in the double to triple digit billion dollar range).

Together, India’s oil companies account for a profit of US $ 6.7 billion with revenues of US $ 138 billion. Even when only looking at the top-six state oil firms, the combines market value is above US $ 77 billion.

The Indian oil ministry is currently examining different strategies and possible outcomes for a merger and fusion of the country’s public oil firms and whether or not entities like the Oil Industry Development Board, the Petroleum Planning and Analysis Cell and the Petroleum Conservation Research Association could be included in the future oil giant, market insiders state.

Local media quotes Oil minister Dharmendra Pradhan who said that state firms were considering a stake in the company that pumps more oil than Exxon. A combined oil giant would be the biggest single entity in India.

Similar plans were already discussed in 2005 with no final outcome, as officials believed that smaller, more flexible companies might be a better way to promote competition in energy starving India. Since then, India’s oil firms grew in size and aimed for vertical integration along the value chain. Refiners like Indian Oil, HPCL and BPCL have tapped into exploration and production of hydrocarbons on- and offshore while traditional crude producers like ONGC ventured into petrochemicals and basic materials.