Indian oil companies: BPCL & HPCL CURRENT SITUATION.

1. I N D I A N O I L C O M P A N I E S : B P C L & H P C L
C U R R E N T S I T U A T I O N .
R I YA R A W AT
M B A ( B & F )
A M I T Y U N I V E R S I T Y, M U M B A I .

2. INDIAN OIL
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4. STRATEGIC DISINVESTMENT OF HPCL,
BPCL
• Not one but two oil companies - BPCLNSE 1.59 % and HPCLNSE -0.51 % - may go
under the hammer with state-owned oil and gas explorer ONGC now looking to sell its
stake in recently-acquired refiner HPCL to a strategic investor, possibly an overseas oil
company, to regain debt-free status of the company existing prior to the expensive
buy.
The plan for Hindustan Petroleum Corporation Ltd (HPCL) follows the government's go
ahead to invite a strategic investor for Bharat Petroleum Corporation Ltd (BPCL) where
the Centre owns 53 per cent stake.

5. .
• Government sources indicated that the board of ONGC has informally debated on
continuing to hold on to HPCL as its subsidiary since no synergy was flowing from its
acquisition but the expensive buy had only added debt burden on the parent. "The matter
may be brought up again before the board to finalise future course of action," sources
added.
An ONGC spokesperson could not be contacted and a questionnaire mailed to the
company on the issues remained unanswered.
In of its most expensive buys, ONGC last year paid Rs 36,915 crore to purchase the
government's entire 51.11 per cent stake in HPCL. The acquisition turned the character of
ONGC from being a debt-free company to one with no cash and loads of debt on its books.
ONGC took loan of close to Rs 25,000 crore to buy the government's equity in HPCL.

6. RIL, SHELL LIABILITY TO GOVERNMENT.
• Reliance Industries NSE 0.91 % (RIL) and partner Shell’s liability to the government may fall
in the Panna, Mukta and Tapti (PMT) case after an English court passed an order favouring
the two companies on some aspects of the ongoing arbitration proceedings, sources
familiar with the development said.
The order is one step — but not the final one — toward the conclusion of a decade-old
dispute between the government and joint venture partners RIL and Shell (formerly BG
Exploration) over the state’s share of income from the PMT fields.
In October 2016, the arbitration tribunal pronounced a final partial award that went largely
in favour of the government, following which the oil ministry computed the three oil
companies’ liability and directed them in May 2017 to pay $3.9 billion. The companies
refused to pay, saying the award had been challenged in an English court and the liability
not yet quantified by the tribunal.

7. IRAN SANCTIONS FUELING TENSIONS
WITHIN OPEC.
• Two months before renewed U.S. sanctions on its oil exports take effect, Iran has already suffered a
sharp drop in sales and lost key buyers in Asia and Europe.
That slump will continue in coming weeks. Meanwhile, rising output from other OPEC members is
fueling tensions within the producer group that could come to a head at a meeting in Algeria later this
month.
Iran exported just over 2 million barrels a day of crude oil and condensate (a light form of crude
extracted from gas fields) in August, according to Bloomberg tanker tracking. That is the lowest since
March 2016, and down 28 percent from April, the last month before President Donald Trump
announced that he was withdrawing from the Iran nuclear deal and reimposing sanctions.
Several key buyers of Iranian oil have already halted purchases. There have been no shipments to
South Korea or France since June, while overall exports to the European Union have fallen by about 40
percent since April.

8. OPEC

9. .
• While the loss of Iranian exports is causing some concern over a potential tightening of the
oil market towards the end of the year, rising production from other OPEC members has
more than offset the loss so far.
Total OPEC oil production has risen by 840,000 barrels a day since April. Taking out the
contribution of the Republic of Congo, which joined the group at its June meeting, the net
increase is still more than half a million barrels a day.
While the decision taken at the the meetings in Vienna in June to boost output by bringing
production closer to the level agreed at the end of 2016 is helping to ease supply worries, it
is also causing friction within OPEC.

10. THANK YOU!