ONGC to enter oil trading, build strategic reserves
State-owned Oil and Natural Gas Corporation (ONGC) plans to enter crude and petroleum-product trading and build a new strategic petroleum reserve as it seeks to strengthen supply security and extract more value across its energy portfolio, while continuing to make upstream exploration its central focus.
ONGC’s new trading unit is expected to begin operations “end of this year”, Chairman and CEO Arun Kumar Singh told reporters. The will initially handle the group’s own crude and product requirements, while also pursuing third-party business.
The unit, which ONGC is considering locating in Dubai or Singapore, could create opportunities worth about USD 1 billion a year through better crude sourcing, freight management and risk management, Singh said. “We are very close to it (setting up trading desk). Already 95 per cent work is done. We are waiting for one or two boxes to be ticked,” he said. A partner and location of the desk is yet to be decided, he said.
Hindustan Petroleum Corp Ltd (HPCL), Mangalore Refinery and Petrochemicals Ltd (MRPL), and an international trading partner that ONGC is currently selecting are expected to have stakes in the trading venture.
The unit would also coordinate with ONGC Videsh Ltd, the group’s overseas investment arm, and ONGC Petro Additions Ltd.
The move would give ONGC and its group companies a single commercial interface in global oil markets, replacing a fragmented model in which individual businesses source, sell and procure crude and feedstock separately.
While ONGC produces the barrels, its subsidiaries HPCL and MRPL import crude independently. Its overseas arm OVL sells its own equity production, and OPaL sources its own feedstock.
