India's government-controlled Oil and Natural Gas Corporation (ONGC) is going to open a new trading company. Its primary focus will be on purchasing and selling crude oil and refined fuels through a single window of the company's subsidiaries.
They include Hindustan Petroleum Corporation Ltd (HPCL), Mangalore Refinery and Petrochemicals Ltd (MRPL), and ONGC Videsh Ltd (OVL). This project is expected to contribute approximately $1 billion to the company's annual profits, representing a significant strategic change for the firm.
Presently, the trading operations of ONGC's subsidiaries are conducted independently, with each subsidiary separately buying and selling crude and refined products.
The separate trading of each subsidiary has resulted in the firms being less efficient and unable to take advantage of economies of scale. The company has decided to consolidate these activities under one entity to streamline operations, negotiate better pricing, and increase overall profitability.
The crude oil trading company will manage the oil purchases for HPCL and MRPL and trade the oil and gas produced by OVL. HPCL is now the importing source for roughly 36 million tonnes of crude oil every year, while MRPL is the source of 15 million tonnes of crude oil.
Besides this, OVL's overseas assets are the source for approximately 10 million tonnes of oil and gas equivalent. The total trading volume is estimated to be up to 90 million tonnes a year, which is a massive market for the new venture.
ONGC is planning to enter into a partnership with an international oil company and is willing to share equity in the new venture resulting from the collaboration. Though the specific identities are still under wraps, ONGC Director (Production) Pankaj Kumar said that four foreign companies are really keen on the deal.
The new partners are expected to provide excellent trading know-how and platforms, thereby making the new venture really competitive in the world market.
Along with the trading initiative, ONGC is going to run a full-scale cost optimization plan that will lead to a 15% reduction in costs over the next two years.
The firm is going to save more than Rs. 9,000 crore every year through steps such as optimizing resources in offshore areas, improving drilling efficiency, optimizing logistics routing, reducing inventory, and increasing fuel efficiency.
The company will need these efforts to be profitable and prepare for a scenario where oil prices are very low, with experts predicting that crude oil will be $60 per barrel.
The announcement of the trading venture has positively impacted ONGC's stock performance, with shares rising nearly 2% on October 14, 2025. Investors are optimistic about the company's strategic direction and its potential to unlock significant value through the new trading arm.
Looking ahead, ONGC's integrated approach to trading, combined with its cost optimization strategies, positions the company to strengthen its market presence and achieve sustainable growth in the evolving global energy landscape