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ONGC, IOC strike strategic deal for global-scale play

A Memorandum of Strategic Alliance was signed in New Delhi today between the two oil giants ONGC and Indian Oil Corporation.

In fine, the agreement envisages setting up joint ventures at home and abroad and cooperating in the down and upstream activities for increasing availability of petroleum products for the indigenous market. The pact covers hydrocarbon, power and other sectors.

B C Bora, chairman and managing director, ONGC and M A Pathan, chairman, Indian Oil Corporation signed the documents on behalf of their organisations at a simple ceremony.

T S Vijayaraghavan, secretary, petroleum and natural gas, was present on the occasion.

The prime objectives of the strategic alliance are, to enhance oil security, and achieve sustained growth of these two premier PSUs through synergy in strategy and optimisation of resources.

Actualisation on these objectives will require formation of several joint ventures in India and abroad, to acquire equity oil and gas.

The main features of MOSA are: incorporated joint ventures for exploration of oil and gas in India and abroad, acquisition of participation in exploration projects overseas and incorporated joint ventures in India in refining and marketing, petrochemicals and power and any other area of interest, pooling of resources and facilities at agreed costs and fees.

Incorporated joint ventures would provide comprehensive consultancy services in India and overseas.

As a first step in this strategic alliance, both the companies have already completed cross holding of 10 per cent of the respective government equity to strengthen the synergy at board level. This initiative of the two companies has the approval of the government of India, which has been extending the necessary support to help them emerge as global players.

As the second step, both the companies have identified several opportunities that can be explored with characteristics of a vertically integrated oil major, equipped to compete for risks and rewards at par, with global players.

The basic objective has been to synergise the wide spectrum of core competencies of both the organisations covering the activities ranging from ''drilling to dispensing'' .

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