The government is planning to carry out at least one merger between state-run oil companies by the end of September this year, CNBC TV18 reported citing an unidentified government official’s comments to a news wire, in the latest development regarding the proposed creation of an integrated mega oil PSU (public sector undertaking) of a global scale.
The merger process will likely begin with amalgamation of smaller companies, which may include state-run explorer Gujarat State Petroleum Corp (GSPC), the news report said citing the official.
Shares of oil companies were trading mixed, with the refiners and marketers under heavy pressure, while all the others including exploration companies and gas transmission companies gained.
Earlier this month, Finance Minister Arun Jaitley proposed setting up an integrated oil PSU (public sector undertaking) by merging companies with synergy in order to match the scale of the global oil giants.
India’s largest oil and gas exploration and production company ONGC said then that the proposed integration of oil PSUs will be a big positive for the sector as an integrated company is well positioned to handle volatility in crude oil prices. Negotiation power of a large oil company is better with its business partners, it had said.
Though such a merger has been proposed earlier as well, the fresh developments signal the government’s intent to support the energy sector in achieving a global scale to compete with the biggest of oil companies. Read More…