IOC chief welcomes proposal to merge oilcos into energy behemoth

The chairman of the country’s largest oil marketing firm believes that the government's Budget proposal to merge all state-owned energy firms into a consolidated giant will help them enhance their position in the international market."The proposal of merging oil companies into one big public sector undertaking (PSU) is a welcome move, though it may not be an easy task," said Indian Oil Corporation Chief B Ashok.

He said that integration across the value chain will bring stability to the industry and mergers can lead to creation of a world-scale company."The oil and gas industry is highly volatile, prices are fluctuating and integration can help absorb this volatility better," he said.

Finance Minister Arun Jaitley in his Budget speech last week had announced a proposal to merge state-owned oil companies to create an integrated oil behemoth. The creation of an oil giant will also allow it to actively look at mergers and acquisitions in a proactive manner. Indian Oil is the top-ranking Indian company on the ‘Fortune 500’ list for 2016 at 161, with the other two state-run oil marketing companies also making it to the list.Despite this, none of the top Indian energy companies feature in the top 10 global giants, even as ONGC has actively ventured abroad through its ONGC Videsh arm.However, even if all of India's oil firms were merged, the combined entity will still unlikely be able to break into the global top 10.Exxon (US), Gazprom (Russia), Lukoil (Russia), Rosneft (Russia), Total (France), Sinopec (China), PetroChina (China), Chevron (US) and BP (Great Britain) are among the world's largest integrated oil & gas players. The financials of Saudi-based Aramaco, said to be the world's biggest company, are not known.