ONGC eyes $1 bn/yr profit from trading venture, looks to reduce costs by 15%, Pg15.

Key Highlights:

• ONGC aims for $1 billion annual profit via a new oil and petroleum product trading venture.
• The company plans to reduce costs by Rs 9,000 crore annually to counter subdued oil prices.
• ONGC is in talks with four international companies to form a joint venture for oil trading.
• The proposed JV is expected to handle 90 million tonnes of trade per year initially.

Detailed Insights:

• ONGC's revenue is closely linked to international energy prices, which are expected to remain at $60-65 per barrel.
• The company's cost optimization plan and trading venture are strategies to mitigate the impact of lower oil prices.
• The proposed trading JV will consolidate trading activities of ONGC subsidiaries like HPCL, MRPL, and OVL.
• The joint venture is expected to be finalized before the end of the current financial year, with the equity split yet to be decided.

Key Concepts Involved:

• Joint Venture: A commercial enterprise undertaken jointly by two or more parties that otherwise retain their distinct identities.
• Crude Oil: Unrefined petroleum, a naturally occurring, unprocessed mixture of hydrocarbon.
• Trading: The activity or process of buying, selling, or exchanging commodities, goods, or services.