New Delhi: Government has asked India's top oil producer Oil and Natural Gas Corporation (ONGC) to drop plans to sell petrol and diesel and focus on finding more oil and gas.
However, the company has been permitted to complete already approved refinery projects.
Petroleum Ministry and the new management of the state-owned exploration and production giant reviewed its business initiatives, especially non-core ones at a day-long Business Plan Review meet in Gurgoan on the out-skirts of the national capital on Saturday.
"The message was very clear - ONGC should no more set up petrol pumps," a company official said.
ONGC currently has one petrol pump at Mangalore and had identified 45 locations from Dehradun to Ahmedabad for opening shop this year.
ONGC and its subsidiary MRPL had plans to raise the number of outlets to 1100 by 2008 as part of its plans to diversify into downstream and liquefied natural gas imports to become an integrated oil and gas company with a turnover of $50 billion within the next few years.
"We were told that since fuel retailing is a loss making proposition (Government has not allowed fuel retailers to raise petrol and diesel prices in line with rise in cost of production), ONGC should focus more on its core competence," he said.
However, the ministry represented by its secretary M S Srinivasan and two joint secretaries at the meeting, allowed ONGC to complete the ongoing expansion of Mangalore Refinery and Petrochemicals Ltd (MRPL) to 15 million tonnes.
The official said there was no word on the new refineries at Barmer in Rajasthan, Kakinada in Andhra Pradesh and a greenfield refinery adjacent to the existing MRPL.
The official said the ONGC may scale down, if not fully abandon, its ambition to convert itself into an integrated player.
Non-core activities including its retail foray, development of special economic zones at Kakinada and Dahej and wind energy projects are likely to be put in the backburner.
Plans for a presence in all spheres of the industry's value chain were envisaged by former chairman and managing director Subir Raha. However, the Government refused Raha an extension after his first five-year term expired in May.
"The Government wants ONGC to focus entirely on exploration and production both at home and overseas, leaving midstream and downstream activities solely in the hands of other state companies, such as Indian Oil Corp and GAIL India," an oil ministry official said.
To convert ONGC into India's biggest energy conglomerate within the next five years, Raha envisaged E&P, refining, petrochemicals, LNG import terminals, power generation and energy transportation as the main focus areas.
Petroleum Ministry says ONGC had "no right" to diversify into other spheres when its crude production is dropping instead of increasing.
ONGC's explanation that it spends 93 per cent of its resources on exploration and production and claims that its current seismic data acquisition and deep-water campaigns were the biggest of their kind in the world, have cut no ice with the Ministry.
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