Decontrol measures were initiated and retention pricing for refineries has been abolished wef Apr '98. The major gainers of deregulation process will be old players with old and depreciated units like - MRL, CRL, BPCL, HPCL, IOCL etc. In addition, net profit will be affected by high interest and depreciation outgo. As at end 1998, the world had proven oil reserves of a little over 1 bbl and proven gas reserves of a little less than 140 trillion cubic meters. Amongst players, ONGC has a virtual monopoly in upstream crude oil and gas production, while GAIL has a monopoly in marketing and distribution of gas.
Stock valuations continue to remain depressed.
The two negative factors for the sector are dim outlook on global refining margins and supply of stock in the form of government disinvestment. Investors should use all disinvestment programs as a buying opportunity because the long-term fundamental story is still intact. A fortune in black gold. 2001 India Infoline Ltd. All rights reserved.