Indian energy giant: ONGC said to take over HPCL or BPCL

Finance Minister Arun Jaitley in his Budget speech on February 1 had said the government plans to integrate public sector oil companies to rival big international and domestic private sector oil firms. The government is a majority stakeholder in both, HPCL and BPCL,

holding a stake of 51.1 percent in HPCL and 54.9 percent in BPCL. ONGC is unlikely to take over both entities. After the Budget speech, it was widely speculated that government will merge all three entities to create an industry giant. However, the government feels a takeover will be a profitable route, as it leads to divestment gains

Post a takeover, ONGC will be free to partake in all areas of the oil & gas industry: from exploration to refining and distribution. The likely reason behind the integration is that ONGC stands to gain irrespective of the price of crude. If prices rise,

the exploration business gains, and if prices fall, the distribution business gains. This will bring stability into the company's profits and reduce volatility of the share price to boost investor confidence.