Shares of Mangalore Refinery and Petrochemicals Ltd. (MRPL) surged as much as 4 percent on Tuesday amid reports of ONGC's proposal to begin the process of merging its refinery arm with Hindustan Petroleum Corp Ltd (HPCL). The move is aimed at leveraging synergies in ONGC's refinery vertical.

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According to a Hindu Business Line report ONGC is in the process of starting the merger of its refinery arm MRPL with HPCL. The reported quoted ONGC Chairman Arun Kumar Singh, who said that work on this process will begin now.

ONGC had acquired a 51.1 percent stake in HPCL for Rs 36,915 crore in 2018. The upstream oil major hoped that as an integrated oil conglomerate, it will be less dependent to volatility of crude prices due to the diversification of cash flows to midstream and downstream presence through HPCL.

On the other hand, MRPL completed the acquisition of OMPL, which was jointly promoted by ONGC and MRPL. The consideration for the acquisition is said to be around Rs 1,216 crore.

ONGC currently owns 71.6 percent stake in MRPL, while HPCL holds another 16.96 percent. The news report also stated that the merger of MRPL and HPCL will take time as the latter also happens to be one of the promoter entities of MRPL.

MRPL is engaged in the business of refining crude oil. The company is involved in production of liquid or gaseous fuels, illuminating oils, lubricating oils or greases or other products from crude petroleum.

Shares of MRPL are trading 2.5 percent higher at Rs 59.25.