Thursday, October 6 2005 15:06 Hrs (IST) - World Time -

New Delhi: Government is mulling hiving off ONGC Videsh Ltd, India's flagship firm for overseas oil asset acquisition, from Oil and Natural Gas Corp (ONGC) into a separate entity to be owned jointly by public sector oil firms.

OVL, which has properties in 13 countries, is a 100 per cent subsidiary of ONGC. While it competed with the might of old warhorse China on almost all assets on block, aspirations of other state firms like Indian Oil Corp (IOC) and GAIL for space on global upstream scene sometime sent confusing signals to Governments of oil-rich countries as to who represented India.

Sources said Petroleum Minister Mani Shankar Aiyar, in a 13-slide presentation titled 'Energy Security & India's Oil Diplomacy' for the Cabinet, suggested restructuring OVL into a Single Special Purpose Delivery Vehicle that would compliment the oil diplomacy frenzy he has unleashed during past one year.

Aiyar believes his attempts in getting oil-rich nations accommodate India had often been lost due to lack of adequate follow-up action on part of OVL, which he says is 'poorly' staffed.

He is suggesting that OVL be restricted on the lines of Petronet India Ltd and be jointly owned by ONGC, IOC, GAIL and Hindustan Petroleum Corp. The restricted OVL would jointly acquire an asset with a principal state enterprise. After the acquisition, a joint venture would be formed dedicated to the project, sources said.

Aiyar feels this would give the new entity better bargaining power, larger reach in the total value chain, better funds availability and risk mitigation.