Indian state refiner Hindustan Petroleum Corp sees itself better placed to buy overseas downstream assets once it becomes part of the country’s top explorer Oil and Natural Gas Corp, its chairman M K Surana said.

The Indian cabinet cleared state-run ONGC to acquire the federal government’s 51.1 per cent in HPCL as New Delhi wants larger local oil firms to take on global rivals.

"When you go for overseas deals, you will get more leverage because of the size of the group," Surana told Reuters, adding the deals should also make ‘economic and commercial sense’.

"Overall we will get the backing of bigger group."

HPCL has in the past tried to enter into fuel marketing in Fiji and Africa but none of the deals materialised.

India has a tiny presence in the overseas downstream sector. However, ONGC has acquired a number of foreign oil and gas exploration and production assets through its overseas investment arm - ONGC Videsh Ltd. In the fiscal year to March ONGC made a net profit of 17.90 billion rupees ($277.8 million) compared to 6.2 billion rupees for HPCL.

HPCL controls about 11 per cent of India’s overall 4.7 million barrels per day (bpd) refining capacity, far lower than its retail sales.

"We have a plate bigger than what we can chew, we are buying from other refiners," Surana added.