Energy firms plan joint hunt for foreign supplies

livemint.com:

India's state-run companies scouting the globe for long-term energy supplies are waking up to the power of joint negotiation. Public sector oil refiners will increasingly team up to negotiate oil and gas supplies from abroad, two people aware of the plans said, in a departure from the existing practice of negotiating separately. The joint negotiations are expected to improve their bargaining power, and ensure that they don't compete against each other for the same contracts and drive up prices.

“The requirement for supplies should be looked at as that for the Indian market as a whole. Prices, discounts and other preferential terms are expected to be the same for all the public sector companies; only the quantum would differ. The government is encouraging this trend of holding joint negotiations by the Indian companies," said one of the two people mentioned above, both of whom spoke on condition of anonymity.

The energy companies would sign separate contracts with the supplier, but the terms of the deals are expected to be same. Queries mailed to Indian Oil Corp. Ltd, Bharat Petroleum Corp.

Ltd, Hindustan Petroleum Corp. Ltd, GAIL and the petroleum ministry remained unanswered till press time. There has already been a step in this direction: On 5 July, Mint reported that Indian Oil Corp.

Ltd (IOCL), Hindustan Petroleum Corp. Ltd (HPCL) and Bharat Petroleum Corp. Ltd (BPCL) are jointly negotiating with Brazil's Petroleo Brasileiro SA (Petrobras) for long-term crude oil supplies.

Going ahead, such negotiations will be the norm. Prashant Vasisht, senior vice-president and co-group head of corporate ratings, ICRA Ltd said: “India is a large consumer of oil and gas and has a major say in the market. If Indian companies come