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IOC, BPCL target GAIL to become energy giant

Pursuant to government's vision of creating energy conglomerates to compete with global oil majors, BPCL and IOC have individually opted for a merger with state-owned gas utility GAIL (India). While GAIL, the biggest gas transmission and marketing company is keen on merging with its erstwhile parent company ONGC for better synergies. 

Large state-owned oil companies means better pricing power and as well as better energy security for the nation. Both BPCL and IOC aspire to build their natural gas business. On the other hand, government had earlier approved the merger of HPCL with ONGC. The decision on GAIL will be taken only after the ONGC-HPCL deal proceeds. Earlier in September, ONGC had expressed that it will complete the acquisition of a 51.11 per cent in HPCL by December-end.

GAIL reported PAT of Rs. 1,310 crore in Q2FY18, which was up by 42 per cent on year-on-year basis. The company's Gross Margin stood at Rs. 2,362 crore, up by 28 per cent. GAIL has a pipeline network of over 11,000 Kms and the company holds 71.2 per cent market share in the domestic gas marketing sector and 15 per cent in petrochemicals. The company also has operations in China, Singapore, and the US. Any state-owned oil marketing company which succeeds in acquiring GAIL will gain a tremendous advantage in terms of expertise and market share in the gas business.
 
Meanwhile, at pre-lunch hours the stock of GAIL was quoting Rs. 507.25 per share, up by 0.86 per cent, BPCL was at Rs. 534.10 per share, down by 0.04 per cent, IOC was at Rs. 411.00 per share, up by 0.20 per cent ONGC was Rs. 193.90 per share, up by 0.26 per cent. The benchmark index S&P BSE Sensex was at 33,921.70, down 0.05 per cent, after hitting a new high of 34,000 level in early morning trade.

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